Abstract

The textile and clothing industry forms a significant manufacturing

base of many developing countries. India has a strong legacy and
significant capacities in this sector. The sector is a major employer and
contributes significantly to exports. The textiles industry provides input
to the clothing (or apparel) industry, providing strong vertical linkages.
The clothing industry is labor-intensive and it provides employment to
those with simple skills, including women. The mass production
segment focus on low-cost, standard products and at the lower-end it
may also outsource to household production. The high fashion segment
of this industry is more technology-intensive and provides opportunity
for innovation and value addition.

Indian clothing was of high quality and was much in demand globally
since ages back. However, there was a period of de-industrialization
during the time of British colonial rule during which this industry
suffered from a major setback. After a period of major economic
reforms in independent India, exports from this sector have grown
substantially. India is still highly competitive globally in this sector.
Though China is the dominant leader in this sector, China does not
have the entire value chain within the country as India has. Other
competitors such as Bangladesh are competitive in low wages but
they do not have cotton production in their country
Introduction
The textile and clothing (T&C) industries form a major part of manufacturing
production, employment and trade in many developing countries. Textiles and clothing
plays a major role in the development and industrialisation process of countries and
their integration into the world economy. The WTO (2006) notes that in 2004,
developing countries as a group (low and middle income countries) accounted for more
than half of all world exports of textiles and clothing and that in no other category of
manufactured goods do developing countries enjoy such a large net-exporting position.

All world regions have experienced double digit growth in the manufactured goods
sectors within the last two years (see appendix tables A1-A6) . While textiles and
clothing industries account for only a small percentage of total world manufactured
exports, 4.5% in 2006, some regions and countries rely on T&C for a much higher
percentage. Regions with an above average share include Asia, and for clothing - South
and Central America, Africa, and Asia.
Literature review

Vardhman Textiles
India continues to be one of the world’s fastest growing economies in a
largely volatile global economic scenario. The Government is
implementing key reforms to drive sustainable economic growth, despite
challenges. There is focus on developing infrastructure, increasing rural
spending and giving Indian youth opportunities to attain relevant skills for
employment or entrepreneurship.
During FY 2016-17, the Government took steps to shape a bigger and
cleaner GDP through the demonetisation initiative and by facilitating the
passage of the Goods and Services Tax (GST) Bill in the Parliament.
These steps may bring more of the economy in the organised sector and
also enhance the revenue collection,
which may enable the Government to give relief to certain sectors where
tax rates are high.
In the global textile sector, developed countries like the US and European
Union are major buyers, whereas emerging markets like China, India,
Bangladesh, Vietnam focus on manufacturing, owing to lower cost in these
regions. Among the emerging nations, currently China is a dominant player
in the global textile trade. However, this is likely to change owing to
increasing labour and production cost in the region, offering a wide
opportunity to India and other developing countries like Bangladesh and
Vietnam.
The countries that are able to offer a climate which makes apparel industry
more competitive, may presumably take a bigger share of the world trade in
textiles.
It may be pertinent to state that apparel is going to drive growth of the
textile industry in Asian economies as it is always followed by spinning
and fabric making to integrate the entire chain. In our view, any country
which intends to develop a section of the industry independent of the
growth of apparel may succeed for a time, yet may find difficulty in
competing. A vertically integrated industry provides a better chance for
each country to remain competitive as also attractive to world retail buyers.
Obviously, the preference goes to such countries as lead time due to
fashion changes is fast coming down. A shorter supply chain management
may become key for the success of any country in grabbing a larger world
share in this industry.
The Government of India is finalising the New Textile Policy, which we
hope may address many of the concerns, which at present are limiting the
growth of this industry. We hope the Government will utilise the potential
of this industry in creating millions of jobs by having a more holistic
approach and plan of action by going through those factors, which affect
our competitiveness in relation to countries like Bangladesh and Vietnam,
which have significantly exceeded their export of garments over India in
the last few years. This is evident from the fact that Bangladesh and
Vietnam have a 6% and 5.3% share in apparel exports as against India’s
share, which was 4.1% in 2015.
In today’s competitive world, employees are a company’s most important
resource and asset. The Company fully recognises this fact and wants its
employees to participate and share the fruits of growth and prosperity along
with the Company. We have a vision of being
the preferred partner of choice for all our stakeholders i.e. employees,
clients, government and society.
Towards this vision, this year, we decided to reward our employees’ long
association with the Company as well as motivate the employees by
creating a sense of participation and ownership among them, by grant of
Employee Stock Options. The ultimate objective is to achieve sustained
growth of the Company and the creation of shareholder value by aligning
the interests of employees with the long-term interests of the Company.
Investing for future We focus on optimum capacity utilisation, customer
service, differentiation in portfolio and uniform quality standards to keep us
ahead of the curve.
At VTL, we have incurred a capital expenditure of around ` 2,000 crore in
the last five years. Currently, we operate at near 100% utilisation levels in
the yarn business, catering to diverse customer requirements. We are also
consolidating our fabric business and are focusing on expanding capacity in
this space.
Going forward, we have a planned capital expenditure of ` 2,500 crore over
three-four years towards the ongoing schemes at Baddi, Himachal Pradesh,
as well as proposed expansion in Satlapur and Budhni in Madhya Pradesh
and modernisation in other units.
The proposed capex would be partially towards the ongoing expansion
schemes for enhancing yarn dyed and printed fabric capacity as well as
increasing looms capacity.
Further, it has been proposed to increase fabric processing capacity, at
Budhni, Madhya Pradesh, along with
installation of additional spindles at Satlapur.
We have emerged as one of the leading players in this sector through our
team’s persistent efforts. We are consistently investing in enhancing the
capabilities of our people through focused training and coaching. We
identify high-potential individuals and groom them for future leadership
roles.
Partnering the community During the year, as a part of our corporate
responsibility initiative, we focused on education, healthcare and
community development. We assisted government schools near our
locations by providing adequate infrastructure.