SHARMA FASHIONS.

Group: 09

Index
I. Executive Summary

Page
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II. Business History

III. Market Research

IV. Marketing Decisions

V. Legal Decisions

VI. Manufacturing and Operations

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VII. Personnel Strategies

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I.Executive Summary
SHARMA Fashions pvt. ltd. is an apparel manufacturing company that deals mainly with mens and womens garments and has not yet diversified into childrens clothing. It has been in existence for 5 years, operates out of its main commercial office in Andheri and has a manufacturing unit in Vashi. The organization is divided into various departments such as Finance, Marketing, Creative department, Production Management, Accounting, Human Resource, Quality Control and so forth and each department has their own separate requirement. Finances are managed by ICICI and Axis Bank that offers relatively low rates for working capital finance. Raw materials are imported from China and Nepal in abundance and are then converted and re-exported, Europe and USA being the main market. At SHARMA Fashions Limited, we continuously innovate & offer merchandise that is unmatchable. In addition we have in house integrated Design Studio and R & D Laboratory with modern equipment. We enjoy certain benefits such as duty drawback, discounts on machinery, and also receive concessions on the imports. As far as distribution goes, it follows the indirect exporting strategy where commission agents and wholesalers undertake the sales and promotion activities of the organization.

II. Business History

Incorporated in the year 2007 SHARMA Fashions Limited started its business at Andheri in Mumbai. Consistent hard work and adapting to the market trends and buyers needs have enabled SHARMA Fashions Limited to establish itself as market leaders in manufacturing, sourcing and trading all types of textile products. SHARMA Fashions pvt ltd. has been in the apparel manufacturing industry for 5 years. In that time we have focused mainly on Mens and Womens garments and not on childrens apparel yet. Products manufactured by the company include mainly t shirts and shirts to a certain extent. The products therefore cater to a wide range of male and female consumers across income levels. We offer good quality product at a competitive price with a great amount of variety in the products for instance cartoon print t- shirts to quoted t-shirts, thus ensuring value for money for its lower priced products , claims to be the main selling point of the company. The company trades internationally because of the favourable concessions received from banks and the government policies for export. Also prices in the foreign markets are higher than in domestic markets thus making SHARMA Fashions pvt. Ltd primarily export oriented. Our company exports virtually most of our production with surpluses being sold in the local markets due to the above reasons. In India, after the agricultural sector the garment export industry is one of the largest industries generating directly and indirectly the highest amount of employment. The garment export industry also contributes a large amount of foreign exchange for the nation and is one our most important net exporting industries. India grew its share in the global garment export market rapidly in the 80s. The majority of Indias garment export is to developed nations. However, since various reforms in 2010, the market has become more competitive with China, South Korea, Hong Kong, and other Asian countries gaining a technological edge over India. Due to this, SHARMA Fashions pvt ltd. has followed a policy of maintaining up to date machinery and technology in order compete at a global level.

Firms such as Creative Garments, clothes rack brands for less etc.are direct competitors to us as they manufacture similar products and export to our target markets as well. However for our company , competition among Indian exporters is limited as not many manufacturers are into manufacturing high value added, branded apparel.

Organizational structure:

ABC SHARMA
CEO

JHS Sharma Finance

Shah Sharma Marketing

Mangal Pandey
HR

AMAN Sharma Manuf.

TOD Sharma Logistics

Considering that it is a small unit, we have a very flat level of hierarchy.

III. Market Research

As with most other companies in the garment export industry, we export primarily to developed nations. Also, as our company specializes in mid to high end apparel, the developed nations are the best market for our products. Primary Market: Europe Since the European Union has a common unified trade friendly economy with a free flow of goods across its trans-national borders, which chose to tap this market. Due to this, we only have to pay a uniform duty rate regardless of which country in the EU the goods are exported to. Also, majority of the members of EU single market share the same currency, i.e. the Euro.

Secondary Market: United States of America The United States of America has the largest economy in the world and is the worlds largest importer therefore making it an important market, however, the higher competition and uncertainty of laws in the USA made us choose Europe as primary market.

Garment Exports from India

Current Scenario

The current situation in our target markets is that the demand for apparel is rising, and their domestic suppliers cannot compete with our prices. However China, Sri Lanka and other East Asian economies are exporting in large amounts to Europe as well as America. The competition is severe and while our company has updated and state-of-the art technology, most Indian manufacturers do not. For Europe in particular, we face strong competition from Turkish, Hungarian and Romanian manufacturers. Whereas in the case of the United States of America, it is again the other Asian economies competing on the basis of low raw material and labor costs as well as established loyal brands such as Ralph Lauren Polo, Hollister, etc. The existing demand which fell due to the recent economic downturn in both our target markets has reduced temporarily however with these economic issues being the most focused on issues, the situation is likely to change shortly. The recent fluctuation in the Rupee: Dollar ratio also benefitted Indian exporters as the Dollar touched a 52 week high of 54 rupees. The EU countries have no discriminatory practices against a particular country and there are no significant trade restrictionsand the market is free of quota restrictions. The Indian Apparel & Textile Industry is one of the largest sources of foreign exchange flow into the country with the apparel exports accounting for almost 21% of the total exports of the country.

Strengths and weaknesses of the textile and apparel industry in India

1.Strength 1. India is self-sufficient in terms of raw material such as cotton. India is the third largest in the world in the production of cotton. 2. Cheap labor and developing entrepreneurial skills have always been the backbone of the Indian Apparel and textile Industry. 3. The small size of manufacturing in the apparel industry allows for greater flexibility to procure specialized orders and undertake job production 4. The cultural diversity and rich heritage of the country yields in extremely creative designers. 2. Weakness 1. The Spinning Sector in India lacks modernization 2. India has relatively less number of shuttle-less looms (weaves 2-4 times as much as conventional looms) 3. High power costs and long export lead times are eroding Indias export competitiveness 4. Less attention on man power training 5. Large distance of the potential market

Competition

Our competitors include numerous apparel designers, manufacturers, distributors, importers, licensors, and retailers, some of which may also be our customers. The level and nature of our competition varies and the number of our direct competitors and the intensity of competition may increase as we expand into other markets or as other companies expand into our markets. Some of our competitors may be able to adapt to changes in consumer demand more quickly, devote greater resources to establishing brand recognition or adopt more aggressive pricing policies than we can. In addition to this, with respect to certain of our businesses, retailers that are our customers may pose a significant competitive threat by sourcing their products directly or marketing their own private label brands. These competitive factors within the apparel industry may result in reduced sales, increased costs, lower prices for our products and/or decreased margins. With over 200 registered readymade garment exporters only in the country, the competition is extremely high. However, we choose to deal specifically to the requirements of European and American Markets which brings down the competition greatly. However, competition isnt only from the Indian exporters, but the exporters from china, Hong Kong and Singapore as well which only makes it more difficult, forcing us to take all possible measures to reduce costs and enhance the overall quality of our products.

IV. Marketing decisions

A. Distribution strategies The distribution strategy we have chosen is that of indirect exporting. However, gradually we are gaining better knowledge of our consumers preference and their demand therefore we are starting to use directly exporting on a small scale as well. As part of our marketing strategy, our agents are in touch with our customers to discuss new sample requirements and product developments which we incorporate in our manufacturing process on a quarterly basis in order to keep up with fashion trends (only for job specific orders) B. Pricing strategy The pricing strategy that we use is Competitive pricing, i.e. based on the prices charged by our competitors. Our products range from $3 - $15 based on the colors, prints, styles, etc. eg. Polo Collared T-shirts are 20-25% more expensive than round neck t-shirts C. Promotion strategy Promotion of our products is also primarily undertaken by our commission agents and resident buyers that have the required local knowledge of what works in their respective markets. We also regularly take part in trade fairs organized by the AEPC. However, the major promotion of our products is that we price much lower than most of the other garment/apparel suppliers while maintaining superior and consistent quality. D. Product strategy Our products range from tshirts, knitwear, ladies tops and tracks, etc and considering the wide range of our customer base characteristics we provide various different sizes ranging from XS to XXXL. We also offer a range of different color and design patterns which change on a seasonal basis as per information obtained from our agents in the target markets.

V. Legal decisions With regard to the Agent/distributor agreement, commission agents were hired separately for both our target markets. The agreement with them is that of a nonexclusive agreement so that a sale to any area does not have to involve one particular agent is therefore more flexible. The agents we are associated in our target markets are as follows: Worldwide enterprises LLC (USA) Shenzen Richford Enterprises (Europe) Shinobe globallink marketing (Europe) Our company has the valid import export code number and is a member of AEPC (Apparel Export Promotion Council) Some of the documents required for garment export:

Customs Declaration Form Customs Invoice (Mainly needed for the USA) Bill of exchange Bill of Lading Commercial Invoice Certificate of Origin Marine Insurance Certificate

The disputes of our company are handled by the Alternative Dispute Resolutions (ADR) function Indian Institute of Arbitration and Mediation (IIAM) covering our entire legal framework. Quality Every individual article has a separate standard, as specified by the importing company. However, The company has been credited with the ISO 9001:2010, and thus will follow all the quality standards and norms as dictated by it.

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VI A Manufacturing Process:
The manufacturing process of t shirts is a fairly simple and largely automated process. Specially designed machines integrate cutting, assembling, and stitching for the t shirts to be produced. Here, they produce 2 types of t shirts with respect to the seams. One of the processes includes narrow, superimposed seams, which are usually made by placing one piece of fabric onto another and lining up the seam edges. These seams are frequently stitched with an overedge stitch, which requires one needle thread from above and two looper threads from below. This particular seam and stitch combination results in a flexible finished seam. The second type that is used is called bounded seams, where a narrow piece of cloth is folded around the seam, as the neckline. These seams may be stitched together using a lockstitch, chainstitch, or overedge stitch. Depending on the style of the T-shirt, the order in which the garment is assembled may vary slightly. The detailed process goes as follows: Cutting: The T-shirt sections are cut to the dimensions of the patterns. The pieces consist of a body, or separate front and back sections, sleeves and pockets. Assembling the front and the back: The separate pieces for the front and back sections must be stitched together at the sides. They are joined at the seam lines to form a simple and narrow seam and stitched together using an over-edge stitch. Care must be taken so that the garment doesnt tear. Assembling the sleeves: The sleeves are generally finished before they are fitted into the garment, since it is easier to hem the fabric while it is flat. There is an automatic system that moves the sleeves through a conveyer. The edge may be finished by folding it, forming the hem and stitching, or by applying a band. During the final stage of sewing the shirt, the sleeve and side seams are sewn in 1 action. Stitching the hem:
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The garment hem is sewn with an over-edge stitch which results in a flexible hem. Tension should be loose enough to allow the fabric to stretch without tearing it. Adding pockets: Pockets are usually sewn into tshirts used for casual wear. Higher quality T-shirts usually inserts an interlining into the pocket so that it maintains its shape. The interlining is inserted into the pocket as it is sewn onto the T-shirt front. Attaching and finishing the neck: Necklines with superimposed seams may be taped, so that the shirt is stronger and more comfortable. Tape may be extended across the back and over the shoulder seams to reinforce this area as well and to flatten the seam. The seam is then cover stitched or top stitched. Label: One or more labels are usually attached at the back of the neckline. Labels provide information about the manufacturer, size, fabric content, and washing instructions.

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B. THE EXPORT PROCESS:

1. Order Form The first step in the Export Procedure of SHARMA Fashions is the receipt of the order form from a prospective importer. A person who is interested in importing garments from SHARMA Fashions sends them an order form with the details of the garments he wishes to import. Details include number of pieces, sizes, colours etc. In the Order form, the importer also inquires about the price, standard, weight of the goods in question. 2. Proforma Invoice After Receiving the Enquiry Order form, SHARMA Fashions prepare a document called the Proforma Invoice. The Proforma Invoice is a statement sent back to the importer before the deal is finalized. It serves as a negotiating instrument. In the Proforma Invoice, SHARMA Fashions give the exact Prices, Quantities, sizes, colors of the garments in question. It also states the weight and standard of the garments in question. The total amount to be paid by the importer is also mentioned in the Proforma Invoice.The initial proforma invoice often sets the stage for the first round of negotiations if the exporter and importer have not yet had any real discussions. 3. Confirmation of Order an Receipt of advance Once the negotiations are completed and the terms and conditions are finalized, SHARMA Fashions sends 3 copies of the proforma invoice to the Importer for the confirmation of the order. The Importer signs these documents and sends 2 copies of the documents along with the advance payment back to SHARMA Fashions. SHARMA Fashions then send a receipt of the advance payment received back to the importer. With the receipt of the Advance, the order becomes finalized. 4. Procurement of Materials Once the Order is finalized and the advance payment is received, SHARMA Fashions procures the required amount of garments based on the specifications required by the importer. He also consults the importer on the choice of supplier depending upon the quality of material required by him. The supplier manufactures the goods and sends it to SHARMA Fashions as soon as they are ready. The goods
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are then stored in the warehouse located adjacent to SHARMA Fashions office until they are ready to be shipped. 5. Preparing Packing List The Garments are properly packed and are marked with necessary details such as port of shipment and destination, country of Origin i.e. India, gross and net weight etc. A packing list is also prepared along with the goods. The Packing list contains details such as total number of cartons, Number of pieces in each carton, total gross weight and total net weight. The packing list is also essential for the importer as he cross checks the goods with the packing list. 6. Inspection Before the goods are exported, they are sent for inspection and stuffing. The Inspection is carried out to see that the goods manufactured are of the standard promised by SHARMA Fashions. Once the inspecting officer is satisfied with the quality of goods produced the inspection is completed. He then gives SHARMA Fashions an Inspection certificate which the exporter would later have to produce at the Customs Authorities. 7. Obtaining Insurance Policy Once the Goods are ready to be exported, SHARMA Fashions obtain an insurance policy. This is done to avoid the risk of loss of the goods during transit. The Policy taken by SHARMA Fashions is an Export Credit Guarantee Corporation of India Policy. In case anything were to happen to the garments during transit, SHARMA Fashions could not be held liable for the loss. If anything were to happen to the goods then the insurance company would be held liable. Once the policy is granted he will receive an Insurance Certificate as well as a Trade Certificate 8. Appointing Clearing and Forwarding Agent At this point, SHARMA Fashions appoints a Clearing and Forwarding Agent for the smooth clearance of goods from the customs and preparation and submission of all Export related documents. SHARMA Fashions deal with a large volume of business, so it is impractical for them to keep running to the Docks for any shipping related problem; hence they appoint a Clearing and Forwarding agent to help take care of all the post production work.

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9. Dispatch of Goods The dispatch of goods can be carried out in 3 ways at SHARMA Fashions. The first method is called FOB(Free on Board). In this process they send the goods till the port (ex. JNPT). This is the end of their job. The next method is called the CIF method. Here, they send the goods till the export destination. This process also included Insurance of the goods. The third method is called the CNF method which is similar to the CIF method, but the goods arent ensured. The export process is carried on by sea or air. 10. Invoice After appointing the agent, SHARMA Fashions then send a copy of the commercial invoice to the importer by courier along with a letter stating the actual date on which the goods will be dispatched. Once the importer receives the commercial invoice, he knows the exact amount of the money that is due to SHARMA Fashions. SHARMA Fashions send him the invoice in advance so that he has time to arrange for the money and make the payment on the due date. 11. Obtaining Mates Receipt After completing all the necessary formalities like submitting certificate of Inspection and submitting packing list, the clearing and forwarding agent receives the Customs clearance. The Goods are then loaded on the ship. Then the commanding officer of the ship prepares the Mates receipt and hands it over to the Clearing and Forwarding Agent.The mate's receipt indicates the name of the vessel, berth, date of shipment, description of packages, marks and numbers, condition of the cargo at the time of receipt on board the ship, etc. The shipping company does not issue the bill of lading unless it receives the mate's receipt. 12. Obtaining Bill of Lading After receiving the mates Receipt, the Clearing & Forwarding agent hands it over to the Shipping company who in turn issue him a Bill of Lading.Bill of Lading is a document given by the shipping agency for the goods shipped for transportation form one destination to another and is signed by the representatives of the carrying vessel. The Bill of Lading is only given to the Clearing agent after the goods have been loaded and after the mates receipt has been issued.

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13. Obtaining Shipping Bill Once the Mates Receipt is accepted by the shipping company, they issue the Bill of lading. Then the Customs authorities issue a Shipping Bill. The shipping bill is the main document on the basis of which customs office grants permission for the export. The shipping bill contains particulars of the goods being exported, the name of the vessel, the port at which goods are to be discharged, country of final destination, exporter's name and address, etc. On obtaining the Shipping Bill, the Clearing agent sends all the documents to SHARMA Fashions along with the bill for his services. 14. Submission of Documents On receiving the Documents from the Clearing Agent, SHARMA Fashions submits them to their Bank Oriental bank of Commerce. After scrutiny of the documents, Oriental bank of Commerce forwards these documents to the Importers Bank. 15. Receipt of Goods Once the Goods are received by the importer after paying the duties, he checks the goods with the packing list sent to him by SHARMA Fashions. Once he is satisfied with the goods, he deposits the remaining amount of money in SHARMA Fashions account. SHARMA Fashions then pay the Clearing and Forwarding agent his dues. After receiving the remaining amount, the export procedure is said to be complete.

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VII Personnel:
Workers: As the company will just be starting, we dont plan to start on full capacity all the time. We plan to employ 50 workers in one shift, consisting of 12 female employees, primarily in the accountants, designing and washing department. The remainder workforce will be carrying out the rest of the work. Skilled: for departments like Accounts, supervisions, managers of inventory, preparing of delivery ad work schedule etc. semi-skilled: for work like designing and purchases, floor managers etc. Unskilled they will be involved in the actual production and packing process for the garments. The women will not be working post 7 pm, due to the rules of the Indian Factories Act. Also, there is no absolute requirement for them to work late on the duties allotted to them. Operations: The company operations will be carried out in 2 shifts of 10 hours each(7am-5pm and 7 pm-5am)), including breaks for lunch, rest and other personal allowances, not lasting for more than 2 hours in a day, 6 days a week. Recruitment requirements: Subject to the department the employees are recruited to, requirements will change. However, qualities such as dedication and honesty are needed from everyone. For the accounts department, the potential employees should have at least the basic qualifications of education, such as XII passed along with a degree specialising in finance. Designing dont really require a specific qualification other than a basic education. However, the stitching and cutting etc should be people, who know the trade and wouldnt really require any training oer say Washing and loading, packing etc dont require any specific qualifications as the work is more physical rather than mental. They should be healthy and able to carry out such tasks.

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Training: Believing in overall development and enhancement of the employees and thereby the company, we plan to make intermittent training programmes a norm, where all employees staying with us for over 10 months will be given training about the various developments and innovations in the garment export sector, depending on the field they are employed in. For the Designers and tailors, programmes run by the AEPC under the names of SMART, community college and Disha which would be partly paid by us, and partly funded by the government as per their policies For the account department personnel, courses in computers and the latest software available for the accounting processes as well as a time to time update about the various policies and their consequent changes. The management also plans to organise seminars with well known people of the field as well as refresher courses on a periodic basis. Incentives: We understand that the human resources need constant morale boosters and incentives in order to achieve maximum outputs. This we have introduced a per piece way of payment Overtime, Diwali and New Year bonuses shall also be awarded to loyal employees with a satisfactory level of output There will always be room to grow and expand the current employment portfolio, depending entirely on the employees capability and motivation. For the female employees, we plan to provide a small day care centre Safety: Accidents in a factory are common phenomena. By introducing certain preventive measures, we hope to reduce the number of these significantly. Protective gloves and face masks for our cutters, washers, dyers and tailors is one of the most basic facilities we plan to offer. Protective, grip boots for the washers in particular are also on the cards. Health insurance for employees who have been with the company for over 1 year also shall be taken by the management.

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Working conditions: Adequate lights and ventilation with proper climate control and seating facilities is the main concern as far as the working conditions go. A clean rest room facility, separate for both genders will definitely be provided for the staff, irrespective of their station in the organization. Also, a canteen with food at concessional rates will be provided

Councils: On inception, we have decided to become a part of the government funded and aided Apparels Exports Promotion Council

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Acknowledgements
We would like to thank our teacher Prof. Venky for the opportunity to understand, to some extent what would starting our own export import business would be like. We would also like to thank all the people who helped us through this project at different areas of developing it. Sincere thanks to all.

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