Study On Distribution Network of Textile Industry

RESEARCH METHODOLOGY
Research Objectives

Distribution network plays an important role in sales of the product in textile

industry as well as other industries. As marketing students we need to study the role of
distribution network in the market so we have taken this opportunity given to us by
Reliance Textiles to gain the knowledge about the distribution network. The main
objectives of our research are as follows:

 To study the market of textile industry.

 To study the role of distribution channel in enhancing the sales and meeting
competitive environment.

 To study the present structure of distribution network of Reliance.

 To study the inventory management (Stocking Behavior) of Retailers.

Research Design

Primary data was collected through Survey method. The questionnaire was used
as an instrument for the survey method. The questionnaire was open ended and closed
ended.

For the collection of the secondary data Newspaper, Magazines, Reference

Books, Internet etc were used.

Sample Area and target samples

We have selected Ahmedabad, Gandhinagar and Mehsana as our sample areas

and our target was the fabric retailers of these areas.

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Sample Size

The sample size for this project was 60 retailers.

Methods Used

Stratified random method was used as a sampling method and face-to-face

interview was used for contact method.

Assumptions

 The sample area is assumed to represent whole universe of Indian textile market.

 Data collected are assumed to be bias free from side of respondent, interviewer or
any other mediaries.

Limitation of the study

 Reluctance on the part of the respondents to provide exact details.

 Lack of sufficient funds to cover the whole universe as sample.

 Limited Coverage area for survey, it was restricted to Ahmedabad, Gandhinagar

and Mehsana City only.

 Time constraint as stipulated by university norms and by project guide.

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The history of textiles is as old as human civilisation itself. Initially used

for protection against nature, textiles were required increasingly to satisfy man's aesthetic
needs for colour and ornamentation in his apparel and surroundings.1940 is considered as
a year of revolution in textile industry. Cotton was the only product earlier but later on
polyester came into the market. The transition from the purely functional to the
decorative use of textiles has been accompanied by a shift in the manufacture of textiles
from a highly individualised and specialised cottage craft to a mechanised and large scale
operation. The creative genius of many persons from all walks of life has contributed to
this evolution.

Indian textile industry is the second largest in the world and also country’s
second largest industry after Agriculture. India has the largest acreage under cotton (9
million hector) and is the third largest producer in the world. It is fourth in terms of staple
fiber production and sixth among Filament Yarn producers. India accounts for about a
fourth of global trade in cotton yarn. The textile industry in India accounts for 9 percent
of Gross Domestics product, 20 percent of industrial production and 35 percent of the
export earnings. It directly employs 35 million persons and widespread forward and
backward linkages with the rest of the economy, thus providing indirect employment to
many more millions.

There are mainly two types of products in the textile industry as given below:

Man Made Fabric : Polyester (Made from chemicals)

Viscose (Made from wood pulp)

Natural Fabric : Cotton

Wool

Silk

A Cotton textile is the most important segment of the industry, accounting

for around 65 per cent of the domestic fibre consumption and exports.

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Currently, India has about 2,600 Spinning and Composite Units with about
35 million spindles and 3,45,000 Open-end rotors, in the mills sector. Besides, there are
about 15.6 lakh Power looms in the decentralized sector, employing about 77 lakh
persons. In the handloom sector, there are 38.90 lakh looms providing employment
opportunities to 124 lakh people. There are about 12,400 processing factories of which
around 10,000 are hand processors.

India produced 2230 million kgs. of cotton yarn, 583 million kgs of
blended yarn, 177 million kgs of 100% non cotton yarn and 769 million kgs of filament
yarn during 1997-98. During the year, India produced 20,000 million square meters of
cotton fabrics, 11,000 million square meters of non-cotton fabrics and 5,800 million
square meters of blended fabrics. About 50 percent of the fabric is converted into
readymade garments in the country. The decentralized power looms sector has a share of
nearly 55 percent and Handloom sector for about 23 percent of the total cloth produced in
the country.

However, India’s percentage share in the global textiles and the clothing
trade continues to be low at about 3 percent. The major reason responsible for a small
Indian share in the World trade has been the technological obsolescence in Weaving,
Processing and Clothing sectors. By the middle of year 1998, the number of closed mills
stood at 231 comprising of 136 spinning and 95 composite mills. In the Power loom
sector, most of the Looms are more than 20 years old and 75 percent of those are
conventional type, not fit for production of fault-free fabric at higher efficiency.

Presently, the industry is passing through a rough phase on account of

unabated escalation in the cost of raw materials and power, sluggish market conditions
both at home and abroad, slack export performance in the wake of South East Asian
currency turmoil, rising imports of textile products and unremunerative prices of yarns
and fabrics. Financial crisis due to liquidity crunch, halting approach of banks in
advancing adequate loans to textile units and high rates of interest stares in the face of the
industry. The old mindset of operating in protected markets with its attendant
inefficiencies will have to give way to a new era of efficiency-driven operations. The
World has enormous appetite for "Low tech" goods - garments, sports wear etc. China’s

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sales in this field are $ 70 billion, 5 times India’s. International standards in quality and
specification need to be imposed; Supply-chain management needs to be developed along
with improving market arrangements internationally.

The Government of India is already alive to the situation. It has recently

created Technology Up gradation Fund, EXIM policy is being revised and an Expert
Committee to review Textile policy is likely to submit its report in the near future.

The textiles sector has a dual manufacturing structure, dominated by a fast-expanding

decentralised small-scale manufacturing segment and a declining vertically-integrated,
large-scale composite mill segment.

For instance, the apparel industry has 27,700 domestic manufacturers,

over 48,000 fabricators, and 1,000 manufacturer-exporters. As much as 80 per cent of
apparel manufacturers have small operations (with less than 20 sewing machines) while
99 per cent of them are individual proprietorships or partnerships. The technologies for
processing cotton textiles and apparel have a broad range -- from hand-operated
equipment to sophisticated automated facilities.

DISTRIBUTION BETWEEN ORGANISED AND UNORGANISED SECTOR

The Organised sector includes the companies which cover composite

process of making fabric to fibre. The organised sector of the textile industry includes the
players like Reliance, Raymond, Birla, Mayur, BSL etc. These all are the big names in
the textile industry but surprisingly the organised sector captures only 20 percent of the
overall market.

The major part of the fabric market that is 80 percent is covered by the
unorganized sector of the industry. The unorganized sector includes the small
manufacturers of the fabric who does not cover the composite process of making fabric
from the fibre. The majority of the small manufacturers are located in the area of Surat,
Bhilwara, and Amritsar. In this way the big part of the total sales is captured by the
unorganized players so the Organised players has to do some thing like tie up with the
small manufacturer to increase the market share of the organised sector.

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INDIAN TEXTILES INDUSTRIES – A Snap Shot

 Largest Gross and Net foreign exchange earner

 35% of the total Export earnings with practically no import content (cotton yarn
contributing 13%)

 20 % of the industrial production

 9% of GDP

 Direct employment to nearly 35 million of people.

 10% of excise revenue

Sector wise Share of Cloth Production

5%
Mill
18%
19% Handloom

Power Loom

Knitted
58%

Performance in Exports Export Marketing is broadly

divided into four zones viz. America
Raymonds

Raym
(U.S.), Europe, Middle East & gulf
Grasim
Relian onds
ce 34% OCM & Digjam and Asia (Far East). In there total
43% OCM Grasi Reliance
& m turnover of Textile Exports America
Digja 9%
m
14%
contributes about 50%, Europe
approx. 15 %, Middle East approx.
15% and Far East contributes about 15% each.

EFFECT OF WTO ON TEXTILE INDUSTRY

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Trade restrictions had hitherto kept the textile industry from soaring to the
heights it is capable of. The year 2005 brings in a host of opportunities for the textile
sector as Quota-based restrictions for textile exports to the United States and European
nations were lifted on. The textile industry now faces a scenario where the players can
export any quantity they want and to wherever they want.

According to Apparel Export Promotion Organisation, the textile industry

is hopeful of achieving about 15-18 per cent growth in the next one year following the
dismantling of multi-fibre agreement. The government is even more sanguine about the
opportunities that phasing out of quota system in world textile trade presents. The
textiles ministry has unveiled a white paper -- Vision 2010 -- for the textile sector, which
set the target of $50 billion exports by 2010.

But with quotas having been removed and globalisation in full swing, the
market is now exposed to global competition. Indian manufacturers and exporters now
have to compete with the global players and also face emerging tariff and non-tariff
barriers. Yet with its speed of operation, skill, quality of products and low-cost labor, the
industry is gearing up to reap rich rewards in the new era. Like in the information
technology sector, the textiles business too is experiencing a big boom.

The cost of logistics in the Indian textile industry, unlike in China, is

notoriously high and inflexibility in labour laws discourages the best of the companies to
expand. The textile export business cyclical in nature and it will not like to on rolls
employees who will be sitting idle for a chunk of year. The government has also fine-
tuned the technology Upgradation Fund Scheme (TUFS) for the sector that has been
running for the last few years.

With the multi-fiber arrangement coming in competition will increase

drastically. In Italy a cluster of small specialised textile firms are competing on end
products, Germans weave for 24 hours under “lights out” arrangement, TQM is ensured
in Japanese and American plants, ‘looming robots’ are installed and firms in Southern
USA are reported to be researching the use of genetic engineering, cellular biology and
tissue culture to grow coloured cotton.

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Under these circumstances India needs to push hard. An IIM Ahmedabad

study points out the loopholes in Indian Textile Industry as long manufacturing and
delivery times, conflicts and competitions between small, medium and large players and
among links of supply chain viz. cotton producers, spinners, weavers, etc., poor process
control, outdated technology, non-existent indigenous R&Ds, etc.

About India, the WTO says: 'The country could nearly quadruple its share
of the US market to 15 per cent from 4 per cent in 2002.' According to a Crisil study,
Indian textiles and apparel industry can reach $85 billion by 2010 and needs an
investment of Rs 90,000 crore (Rs 900 billion) over the next five years. The industry has
seen investment of about Rs 50,000 crore in the last years and has ramped up capacities
to meet the challenge of quota free regime. However a total investment of about
Rs 1, 40,000 would be required to reach the export target of $ 50 billion by 2010.

Even though the textile export quota has been dismantled, not everybody
in India is aware of it. Only the large textiles companies are - small firms do not seem to
have any clue on what is happening and, therefore, the question of these firms preparing
to face a quota-free regime does not arise.

A survey conducted by the Research and Information System for Non-

Aligned and Other Developing Countries has revealed that 75 of the 100 firms covered in
the study are not aware of the development. The study found the level of awareness about
government-run schemes like the Textiles Up gradation Fund was nowhere near being
satisfactory. Only 45 per cent of the respondents were aware of the scheme, which is
aimed at making cheaper funds available for modernisation.

In terms of trade barriers coming up in developed countries, the survey

noted the industry as a whole considered environment and labour standards as the highest
threat, followed by trade diversion effects, product standards and transitional safeguards.

Once quotas go, the sheer competition for volumes between China's
manufacturers and suppliers will ensure that prices drop by at least the same amount. In
2002, when quotas were lifted on 29 categories of apparel, prices crashed by an average

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of 34 percent, and sometimes as much as 50-80 per cent. If this scenario holds, Indian
textile companies will also face pricing pressures. Quota premiums for apparel are high
and account for between 25 and 35 per cent of the selling price.

According to Rajinder Gupta, CEO of Trident India there will be bigger

opportunities for our textile industry to increase its market share in the post-quota world.
The country has natural competitive advantages, such as availability of inputs like cotton,
yarn and low-cost, well skilled manpower. Combined with the proactive stance taken by
the government, India is poised to gain market share at the expanse of high cost western
countries as well as others that enjoyed quota-free access.

The main challenge for Indian textile industry lies in protecting its
domestic market. The 3 C’s of commitment. Co-ordination and Co-operation need to be
applied all levels to be able to maintain its presence in the global market.

Symbols of changing textile industry

 Netaji Apparel Park at Tirupur India's first, biggest and most modern textile
cluster that matches China's textile industry in production quality and quantity.

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 Welspun India Ltd, one of the world's largest producers of terry towel products, is
building a $220 million factory in Gujarat.

 Arvind Mills Ltd, Asia's largest producer of denim, is setting up new plants in
Bangalore and Ahmedabad.

 Gujarat-based Super Spinning Mills Ltd has acquired two sick textile mills in
Madurai to cater to the US market.

Textiles- India has an edge over China

China is the undisputed leader in the world textile trade, making a quarter
of the apparel sold worldwide, but India enjoys a few key benefits over China, which will
come into play in a quota-free world.

India's current share in the world textile trade is only 4 per cent, according
to a study by the World Trade Organisation. But the Indian government says it can be
doubled to 8 per cent by 2010, now that the multi-fibre arrangement is history.

 China caters to the mass segment; India has the ability to service high-value niche
orders and has better designer resources.

 There is evidence to suggest the US textile industry is lobbying hard to block

dumping of products from China.

 India is a favored destination in view of abundant availability of cotton, cheap

access to funds, traditional textile expertise, skilled labour and designer skills

 At present Chinese textile firms are imparting 70 hours of training each year to an
experienced worker as opposed to 10 hours by Indian firms, investing in R&D for
new application areas, addressing the issue of quality systematically and also
canalizing export through centerlised channel.

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INTRODUCTION TO RELIANCE INDUSTRIES LIMITED

The Reliance Group, founded by Dhirubhai H. Ambani (1932-2002), is

India's largest business house. The Group's activities span exploration and production

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(E&P) of oil and gas, refining and marketing, petrochemicals (polyester, polymers, and
intermediates), textiles, financial services and insurance, power, telecom and infocom
initiatives.

The Group exports its products to more than 100 countries the world
over. Reliance emerged as India's Most Admired Business House, for the fourth
successive year in a TNS Mode survey for 2004.

The Reliance Group Companies include: Reliance Industries Limited,

Reliance Capital Limited, Reliance Industrial Infrastructure Limited, Reliance Telecom
Limited, Reliance Infocom Limited, Reliance General Insurance Company Limited,
Indian Petrochemicals Corporation Ltd. and Reliance Energy Limited.

CORPORATE HISTORY AND BACKGROUND

This is the story of a company with a vision, of how it grew from being
a small trading unit, to be raked among the top 50 emerging market companies in the
world. It is the story of how a company helped place India firmly on the world industrial
scenario taking with it a family a growing family, which include collaborators, suppliers,
customers, employees and the largest investor base in the country. It is the story of how a
company’s vision has extended to include newer challenges, newer goals. And most of
all, it is the story of a company where growth is a way of life.

Reliance began in 1958, as a small trading organization, known as 'Reliance

Commercial Corporation', by late Sri. Dhirajlal Hirachand Ambani (Dhirubhai Ambani,
1932-2002) dealing in various commodities including Nylon and Rayon.

In 1966, Working his way around Mumbai's Mulji Jetha Market, buying and selling
Yarns in the blazing afternoon sun, he finally found meager finance to purchase manually
operated knitting machines for Naroda Textile unit, near Ahmedabad - the first step in his
highly successful backward integration strategy.

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From early days, the focus was on creating state-of-the-art world-class plants. During
1975, World Bank certified that Reliance's textile plant was excellent by developed
country's standard.

In 1982, Reliance Group came up with India's largest polyesters manufacturing plant at
patalganga, near Mumbai. By 1988, this complex was a part of one of the most integrated
marketing complexes of its kind in the world producing Polyester Filament Yarn,
Polyester Staple Fibre, Purified Terephthalic Acid, Paraxylene and Linear Alkyl
Benzene.

In 1991, Reliance started producing Polyvinyl Chloride and Mono Ethylene Glycol at
Hazira (Phase 1), near Surat. Subsequently, Ethylene Oxide, Vinyl Chloride Monomer
and Polyethylene were added to the product spectrum of this Complex. Hazira complex
near Surat in Gujarat is situated on the banks at river Tapti and is spread over 1000 acres
of land, which is comparable in design and Technology to the best in the world.

In 1993 pioneered the first ever Euro Convertible Bond issue by an Indian Company for
US$ 140 million. Reliance raised Rs. 2172 Crores from the domestic capital market for
setting up a World-Class and World-Scale refinery at Jamnagar, Gujarat - the largest ever
offering by any Indian Corporate.

In 1996-97, Reliance became the first Private Sector Company to be rated by

International Credit Rating Agencies. Reliance was rated "AAA", by CRISIL, indicating
the highest credit Quality. Reliance becomes the first Private Sector Company to raise
US$ 300 million in the international debt market in two landmark transactions.

In 1998, Reliance completed phase II expansion of Hazira Petrochemical Complex

including world's largest multifeed cracker with an investment of Rs.9000 Crores (US$
2.5 billion) increasing Reliance's production capacity four folds to more than 6 million
tons per annum.

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In 1998, The Wharton School, university of Pennsylvania, USA awarded Dhirubhai

Ambani the Dean's Medal, for setting an outstanding example of leadership.

During 1999: Integrated Jamnagar Complex comprising world's Largest Grassroots

Petroleum Refinery and fifth largest refinery in the world in terms of size with the
capacity of 27 Million Metric Tones Per Annum which contributes 25% of India's
refining capacity.

2002: RPL merges with RIL the largest ever merger in India. The merger gives RIL the
distinction of becoming India's first Private Sector Company, in the internationally
tracked Fortune Global 500 list of the world's largest corporations.

Reliance rated as "India's Most Admired Business House" for the second consecutive
year in the Business Barons- Taylor Nelson Sofres- Mode Survey.

2002: Reliance acquires IPCL; India's second largest Petrochemicals Company-

consolidates its position in the petrochemical business.
[

Reliance Industries limited today is the India's largest Private Sector Enterprise is a major
player in the Refining sector, Petrochemicals sector, Textile Manufacturing sector and
Power sector.

RELIANCE GROUP OF COMPANIES:

1) Various Division of RIL:

LOCATION YEAR OF
ESTABLISHMENT
NARODA (AHMEDABAD) 1966

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PATALGANGA (MUMBAI) 1980

HAZIRA (SURAT) 1991-92
JAMNAGAR 1999
) Subsidiary Companies:

) Significant Associate Companies:

INDIA'S FIRST PRIVATE SECTOR FORTUNE GLOBAL 500

COMPANY

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RIL is the first and only private sector Company from India to feature in the
2004 Fortune Global 500 list of 'World's Largest Corporations' and ranks amongst the
world's Top 200 companies in terms of profits. RIL emerged in the world's 10 most
respected energy/chemicals companies and amongst the top 50 companies that create the
most value for their shareholders in a global survey and research conducted by
PricewaterhouseCoopers and Financial Times in 2004. RIL also features in the Forbes
Global list of world's 400 best big companies and in FT Global 500 list of world's largest
companies.

RIL emerged as the 'Best Managed Company' in India in a study by

Business Today and A.T. Kearney in 2003. In 2004, the company emerged as 'India's
biggest wealth creator' in the private sector over a 5-year period in a study by Business
Today - Stern Stewart and as India's 'Most Admired Company' in a Business Barons -
TNS Mode Opinion Poll.

Reliance is only corporate entity in the world to be actively involved in the

entire value added chain, from oil production to the retailing of a verity of petroleum
products to textiles.

FINANCIAL PERFORMANCE (2002-03 & 2003-04) OF RIL

PARTICULARS 2002-03 2003-04 Increase of

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Gross Turnover Rs. 65,061 crores Rs. 74,418 crores 14%

Operating Profit Rs 9,366 crores Rs 11,122 crores 19%

Cash Profit Rs. 7,565 crores Rs 9,197 crores 22%

Net Profit Rs. 4,104 crores Rs 5,160 crores 26%

Net Worth Rs 30,326 crores Rs 34,452 crores 14%

Total Assets Rs 63,736 crores Rs 71,157 crore 12%

 Compounded Annual Net Profit growth over 5 years - 19%

RIL's Gross Turnover for the year ended March 31, 2004 is Rs. 74,418
Crores, against Rs. 65,061 Crores for last year, an increase of 14%.

Reliance Industries Ltd. is by far the largest exporter in India with exports
of Rs 14,969 Crores (US$ 3.4 billion) for year ended 2004 which is an increase up to
30% against the last year exports of Rs11,510 Crores (US$ 2.4 billion), which accounts
to 5% of the total exports in India.

"The financial year 2003-04 has been yet another landmark year in the
history of Reliance. It has become the first company in the private sector in India to
record a profit of over one billion dollar in a year.

SWOT Analysis
Strength

 Group’s cash flow and ability to raise big funds in domestic and international
market.

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 Proven ability in executing global scale project.

 Planning largest telecom bandwidth among private players with 60000 Km.
networks.

 Early starter in biotech.

 One of the leading manufacturers in manmade textiles.

Weakness

 Latecomers in the telecom game and are yet to build-up a network in oil retailing.

 With competitors like Exxon Mobil in energy, Bharti and Hutchinson in Telecom
Reliance face a tough test.

Opportunities

 Reliance has potential to exploit deregulated energy sector.

 Buying Hindustan or Bharat Petroleum will bring retail network.

 Data/call center can bring Billion Dollar earning.

Threats

 Need to have a fuel retail network very soon.

 Telecom plans hinge largely on being able to offer CDMA-based Ltd. mobility on
fixed line phones.

IMPORTANT FEATURES OF TEXTILE DIVISION

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 The textile division of Reliance is the first rung in its vertical integration ladder.

 The Reliance textile division offers international standard of fabric quality at very
competitive price and also offers widest colour palette in its fabric range.

 The division has a large manufacturing complex spread over half a million square
meters

 Equipped with one of the largest textile facilities and environment friendly
technologies it is India’s most modern and vertically integrated textile complex.

 The division has high quality control levels with ISO 9000 and ISO 14000
certificates.

 The technological infrastructure is complemented by a talented and skilled

workforce.

 The division produces about 32 million meters of fabric, both for domestic and
international market, offering the maximum range in the most number of
categories.

 The division offers e-enabled operations right from the basic levels of colour
selection to delivery details of fabric.

 The home furnishing brand ‘Harmony’ offers more choice in furnishing fabric
category than any other brand.

 The textile division offers customized sampling facilities catering to specific

requirements of the international market.

 The vertical integration (from fibre to fabric) enables complete quality control at
all levels.

Integrated Textile Division at Naroda, Ahmedabad

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LOCATION: 500 km. North of Mumbai at Naroda, Ahmedabad.

YEAR ESTABLISHED: 1966

TOTAL INVESTMENT: 386.4 Crores (US$ 230 million)

NO. OF EMPLOYEES: Approx. 2400 Staff and Regular Workers

PRODUCTS:
WORSTED SUITINGS
Wool and Wool blend suiting
PV SUITINGS
Poly. Viscose blend suiting
HOME TEXTILES

Polyester and Blends

INFRASTRUCTURE
Total Area 4, 84,950 sq. meters
Built-up-area 3, 01,000 sq. meters
Captive Power Plant 52 MW.
Effluent Treatment Capacity 4 million gallons/day

The Textile Division produces about 32 million meters of fabrics both for domestic and
international markets. This makes it the only textile mill in India to offer the maximum
range in varied product categories.

Worsted Suiting
Capacity - 10 million meters per annum
Spinning capacity - 24000 spindles 3.3 million Kgs per annum.
Count range - 24 - 80 Nm
Looms - Sulzer, Dornier

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Special treatments like Teflon, Enzyme washes etc.

Strong presence in Corporate Wear and Uniform Segments

PV Suiting
Production - 16 million meters per annum
Spinning capacity - 23000 spindles, 4.8 million Kgs per annum
Count range - 15-60 NEC
Looms - Sulzer, Dornier
Special fabrics like Lycra blends and special finishes like Teflon coating, which
perform well on parameters like colour fastness, tensile strength, crease
resistance, drape, handle etc. are offered

Home Textiles (Harmony)

Capacity - 7.5 million meters per annum
Weight range - 100 to 1000 grams/linear meter
Looms - Sulzer, Dornier
Major player in institutions and Contract Market Segment

BRANDS

VIMAL
Suiting & Shirting

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Dress Materials

HARMONY
Furnishing Fabrics
Day Curtains
Automotive Upholstery
RUEREL
Suiting
REANCE
Ready-to-wear
New Products
Over the past two years the Textile Division has introduced following new products
Cotlene
CoolCots
Concept
Micro
Plain Magic
Casanova
Campus
Right Choice
Copper Label

THE MANUFACTURING PROCESS

Fiber to yarn : Spinning
Yarn to Fabric : Weaving
Grey Fabric to Finished Fabric : Processing

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Finished product to Grading : Folding

: Packing
1) Spinning:
Spinning is the process of making yarn from fibers or from polymers
solution in a suitable solvent or as a melt by passing through a spinneret with a large
number of fine holes (for multi filament yarn) or with one hole (for mono filament
yarn). The fiber required for the yarn is brought from the Reliance’s Patalganga plant.
The spinning process as such comprises of the following processes:

a) Carding
b) Gilding
c) Combing
d) Dyeing
2) Weaving: The process is of conversion of the yarn into a fabric on a loom by
interlacing to sets of threads at right angles to each other.

3) Grey Mending
Any defect that may arise in the weaving is rectified by Grey mending.
4) Processing: After Grey mending the fabric is taken to the processing section where
the fabric is relaxed, unfolded, dried, cleared of loose ends, heat set and paper pressed.

5) Mending and Finishing

Final touches are given to the fabric so as to remove any defects before
sending it to the folding section.

6) Folding and Packaging

The fabric is cut according to the different length in the folding sections before it
is packed for final shipment

Distribution Channel Followed By Textile Division of Reliance

The textile division of Reliance is also selling its products through the
similar kind of distribution channel used by the other major industry players given as
below.

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1) Direct Marketing Channel (Zero Level)

This type of channel has no intermediaries. The goods go from the

producer directly to the consumer, e.g. Retail Outlet of companies

Producer Consumer

2) Indirect Marketing Channel

This may further be classified into the following categories.
I. One Level Channel
Producer Retailer\ Distributor Consumer

II. Two Level Channel

Producer Wholesaler\ Distributor Retailer Consumer

CONTRIBUTION OF THE UNIT

Reliance makes the largest contribution to the Indian economy, as a single

business house.

India (Rs. Crores) Reliance Group %

(Rs. Crores)
GDP/Revenue 2,856,000 99,000 3.5%
Indirect Tax 158,500 14,800 10%
Exports 265,000 15,900 6%

Reliance Group at this time is the largest business house in India and has
interests spanning an array of diverse business such as Textiles, Polyester, Fibers,
Intermediates, Petrochemicals, Oil & Gas Exploration, Petroleum Refining and
Marketing, Power, Infocom, Insurance etc.

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Even as Reliance Industries Ltd. strives to reach higher and higher levels of
excellence in their business performance and create wealth for their shareholders, they
are deeply conscious of their social obligations as a corporate citizen.

They care for the people living in the villages around their complex. Their
aim is to enhance the quality of life, welfare and future through their community welfare
programs. Their helping hands always there for them - in normal times and in the time of
need through drought, cyclones and earthquakes. Their community development and
welfare programs cover many villages around the Jamnagar Complex - Motikhavdi,
Nanikhavdi, Meghpur, Gagwa, Padana, Nanalakhia, sikka etc. The Programme focuses
on: -

 Quality of life and primary education: Various facilities provided during the
past few years towards improving hygiene and quality of life include water
drainage systems, roads, street lights, water supply tanks, primary school
buildings, community halls, temples and so on.

 Health Care: In order to ensure availability and access to good health care
facilities, a free round-the-clock medical center has been set up at Motikhavdi.
Also, to extend medical facilities to other facilities to other villages near the
complex, free medical services are provided through mobile dispensaries and
medical camps organized regularly to provide dental and ENT checkups, eye care
etc.

VARIOUS AWARDS AND ACCREDIATION

Naroda 1 1989-96 ASTM Safety Award For achieving lowest disability
injury index every year.

2 1997 The Textile Institute In recognition of the

Development Award company’s commitment to
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international standard of
quality.

Patalgang 1 1994 Indian Merchant Chamber For outstanding achievement to

a Award awards of air and water
pollution control

2 1992-93 Baroda Productive Council For goods house keeping

Award contest for petrochemical
complex

3 1992 British Safety Council For lowest accident rate

Award

4 1991 National Safety Award For highest accident free

period

Hazira 1 1996 ICMA Award For Environmental Control

Strategies and Safety in
Chemical plants.

2 1995-96 Golden Jubilee Memorial For Outstanding Pollution

Trust Award Control Programme.

3 1995 Federation Of Gujarat For Environmental

Industrial Award preservation and pollution
control

Jamnagar 1 2004 ‘Petrochemicals Company of the year’ at the prestigious sixth

annual Platts Global Energy Awards ceremony in New York,
USA

2 2003 Ranked best in Shell Benchmarking for the third consecutive

year in ‘Energy and Loss’ Performance from amongst 50
refineries worldwide.

3 2002 The first ever and largest gas discovery by an Indian private
sector company.

PRODUCT FLOW CHART

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Abbreviation Full Name Abbreviation Full Name Abbreviation Full Name

DEG Di-ethylene glycol MEG Mono-ethylene glycol PP Polypropylene
ATF Aviation turbine LLDPE Linear low density PSF Polyester staple
fuel polyethylene fibre
EDC Ethylene di- HDPE High density polyethylene PTA Purified
chloride terephthalic acid
EO Ethylene oxide NGL Natural gas liquid PVC Polyvinyl chloride
HSD High speed diesel NP Normal paraffin PX Paraxylene
MS Motor spirit PET Polyethylene terephthalate TEG Tri-ethylene glycol
LAB Linear alkyl PFY Polyester filament yarn VCM Vinyl chloride
benzene monomer

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INTRODUCTION
Definition of Distribution Channel:-
According to American Marketing Association
“A Channel of distribution channel is a structure of intra-company organization, units and

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intra-company agents and dealers, wholesalers and retailers through which a commodity
product or service is marketed”.

The role of distribution in ensuring the success of

organisation strategy is often underestimated. Distribution is thought of as a competitive
advantage for those organisations which have built up distribution clout and distribution
through sheer size. Well executed distribution strategy can be a source of competitive
advantage for organisations irrespective of size or market share, provided that it is
focused on end consumer needs and optimised with respect to cost of distribution.

The major focus of distribution channel is on delivery.

It is only through distribution that public and private goods and service can be made
available for use or consumption. Distribution channel help enhance promotion and
selling and impart marketing controls. It is the set of marketing institutions or
intermediaries who participate in distribution of goods and services from the point of
production to point of consumption. The emergence and of wide verity of distribution-
oriented institutions and agencies, typically called intermediaries because they stand
between production on the one hand and consumption on the other can be explained in
the following terms:

 Intermediaries can improve the efficiency of the process.

 Intermediaries help in the proper arrangement of routs of the transactions.

 Intermediaries help in the searching process.

 They help in the sorting process.

Objectives of Channel of Distribution:-

 To ensure availability of products at the point of sale

 To build channel members’ loyalty

 To stimulate channel members to put greater selling efforts

 To develop managerial efficiency in channel organization

 To identify organization at the buyer level

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 To have an efficient and effective distribution system, to make your products and
services available:

 Readily

 Regularly

 Equitably and

 In a fresh form.

Types of Distribution Channel:-

Because of the wide variety of channel arrangements that exists, it

is difficult to generalize the structure of channels across all industries. However,
distribution channels are usually of two types:

1) Direct Marketing Channel (Zero Level)

This type of channel has no intermediaries. The goods go from the

producer directly to the consumer, e.g. Retail Outlet of companies

Producer Consumer

2) Indirect Marketing Channel

This may further be classified into the following categories.
III. One Level Channel
Producer Retailer\ Distributor Consumer

IV. Two Level Channel

Producer Wholesaler\ Distributor Retailer Consumer

V. Three Level Channel

Producer Distributor Wholesaler Retailer Consumer

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VI. Four Level Channel

Producer Agent Distributor Wholesaler Retailer

Consumer

Participants in Distribution Channel

 Manufactures: - A manufacturer is one who produces the product. Manufacturer
represents significant and highly visible channel participants because they
produce product that become the primary concern of the overall distribution
process.

 Agent: - Intermediaries with legal authority to market goods and to perform other
functions on behalf of the producer.

 Distributors: -Distributors perform several functions including inventory

management, personal sale and financing.

 Wholesalers: - Wholesalers are organizations that buy from producers and sell to
retailers and organizational customers.

 Retailers: - As the last link in many marketing channels, retailers sell directly to
final consumers.

Distribution Channel Scenario in India

The sheer diversity in the Indian population’s demographic and
economic status makes targeting it a very challenging proposition. Roughly 68 percent of

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population live in the villages while 32 percent live in cities and towns. There are roughly
about 3,750 towns in India and 64 percent of the urban population lives in 309 of these
towns. The rest are scattered across the remaining 3,400 towns.

The population size of villages ranges from less than 200 to more
than 5,000. Of the total number of villages, 19 percent fall in the 500 to 1000 population
category while 15 percent lie in the over 5,000 category.

There are the income distribution statistics. According to the

National Council of Applied Economic Research’s MISH survey, 50 percent of the
population has income of less than Rs 25,000 per annum (at 1995-96 prices), while just
about five percent has income between Rs 77,000 to Rs 1,06,000.

Distribution of Villages According to Population (%)

Below 500 9.4%
500 – 1,000 18.6%
1,000-2,000 25.1%
2,000-5,000 32%
More than 5000 14.9%

Distribution of Urban Split According to Population size

Population Size No. Of Households
Metros 5 million + 8.3
Mini-Metros 1.5 million 7.3
Main Towns 1,00,000(-) 4.5 THE
Medium Towns 1 million 1.0
Class II and III Towns 20,000-1,00,000 10.6
Class IV Towns 10,000-20,000 3.1
Class V and VI Towns 5,000-10,000 1.1

DISTRIBUTION CHANNEL
Manufacturer/ suppliers
Channel Objectives
 Market Share by
segment
 Profit/ Contribution
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 R.O.I
 Distribution loyalty
 Market Development
 Study On Distribution Network of Textile Industry

Consumer Objectives
Consumer  Choice Manufacturer/ Distributor
Satisfaction  Availability Cooperation/Conflict
 Value
 Conveniences

Distributor’s Objectives
 Turn over
 Gross margin
 R.O.I
 Promotional
Assistance
 Technical Support
 Market Development

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1) In which of the following products you deal

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Products Respondent

Men’s Wear 60

Women’s Wear 19

Home Furnishing 3

60
60

50

40 Men's Wear
Women's Wear
30 Home
19
furnishing
20

10 3

Interpretation

The basic idea behind asking this question is to find out the respondent who deals
in women’s wear and home furnishing fabric apart from men’s wear.

From the survey carried out among 60 retailers who deal in men’s wear 16 are the
retailers who deals in women’s wear and 3 are such who deals both in home furnishing
and women’s wear apart from men’s wear

Reliance has to target this type of retailers for selling “Vimal” man’s wear,
Women’s wear and “Harmony” the home furnishing fabric.

2) You normally stock which of the following company’s brand.

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Company / Brand Respondent Percentage

BSL 35 58.33
Digjam 25 41.67
Donear 33 55
Mayur 22 36.67
OCM 18 30
Raymond 34 56.67
Reid & Taylor 9 15
Reliance 20 33.33
Siyaram 23 38.33
Other 28 46.67

Siyaram; 23 Other; 28 BSL; 35

Digjam; 25
Reliance; 20

Donear; 33
Reid & Taylor; 9
Raymond; 34 Mayur; 22
OCM; 18

Interpretation
This question gives us information about the brands which are stocked by the
respondents. This information helps us in identifying the brands which has more demand
in the market and has a strong distribution channel.
We have found that BSL, Raymond and Donear are the three major brands
having more presence on the retailer’s shelf. While Reliance’s Vimal is stocked only by
20 of the 60 respondents visited. This shows the low demand of Vimal into the area
targeted.
The point to be taken care here is that Raymond and BSL are the brand of the
company’s located in Bombay and Bhilwara respectively has strong distribution network
than the Reliance which is located in Naroda.

3) Please specify the reasons for not stocking other brands.

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Reasons Respondent Percentage

High Price 11 18.33
Low Demand 26 43.33
Inferior Quality 4 6.67
Limited Varity 4 6.67
Less Margin 5 8.33
Availability 1 1.67
Other 9 15
Total 60 100

Other; 9 High
Price; 11
Availabilit
y; 1
Less
Margin; 5
Low
Limited
Demand;
Varity; 4
26
Inferior
Quality; 4

Interpretation

By asking this question to the respondents we can find out the reasons for not
stocking the other brands mentioned in the above question.
The most common answer to this question was low demand by 43.33% of
respondents. The main reason behind the low demand for fabrics might be the increasing
craze of readymade garments. The demand for the fabric can be increased by the way of
advertising or sales promotion schemes.

4) Which of the following parameters you prefer most to stock for any company’s
product?

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Parameters Respondent Percentage

Easy Salability 26 43.33
Product Quality 12 20
Pricing 8 13.33
Brand Equity 10 16.67
Service 3 5
Other 1 1.67
Total 60 100

Service; 3 Other; 1
Brand Equity; 10
Easy Salability; 26

Pricing; 8

Product Quality; 12

Interpretation
By asking this question to the respondents we can find out the reasons for
stocking the brands mentioned in the question-2. These reasons are the factors that
influence the retailers to stock one brand over that of other brands.
In answer of this question 43.33% of the respondents said that the Easy salability
is the factor that influences them to stock any of the brands while around 16.67% and
20% of the respondents respectively have chosen brand equity and better quality as the
reasons for stocking any brand.

5) From whom do you purchase the fabric?

Party Respondent Percentage

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Wholesaler 37 61.67
Agent 11 18.33
Direct From The Company 7 11.67
Depot 1 1.67
Other 4 6.66
Total 60 100

Other; 4
Depot; 1
Direct From
Company; 7
Agent; 11 Wholesaler; 37

Interpretation
With the help of this question we can know the distribution network followed by
various companies.

More than 60% of the respondents have said that they are purchasing the fabric
from the wholesaler this suggest that the companies are distributing their products
through one of the distribution networks given below.

Producer Wholesaler\ Distributor Retailer Consumer

Or
Producer Distributor Wholesaler Retailer Consumer

6) From whom do you prefer to purchase the fabric?

Party Respondent Percentage

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Wholesaler 20 33.33
Agent 10 16.67
Direct From The Company 26 43.33
Depot 0 0
Other 4 6.67
Total 60 100

Other; 4
Wholesaler; 20

Direct From
Company; 26

Agent; 10

Interpretation
This question helps us in finding out the preferences of the respondents regarding
the distribution network. It means if given choice from whom they would like to
purchase.
43.33% of the respondent surveyed said that they would like to purchase directly
from the company because by this way the numbers of intermediaries will be reduced and
they would be able to earn more. While 33.33% respondents have said that they would
like to purchase from the wholesalers because of their limited capacity to purchase and
stock.

7) According to you who provides you better services

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Party Respondent Percentage

Wholesaler 31 51.67
Agent 7 11.67
Direct From The Company 18 30
Depot 0 0
Other 4 6.66
Total 60 100

Other; 4
Direct
FromCompany;
18 Wholesaler; 31

Agent; 7

Interpretation
This question also helps us in understanding the viewpoint of the retailers. We
want to know according to them (retailers) who can provide them more and better
services.

As shown in the above chart according to 51.67% of the respondents wholesalers

are the one who can provide them more services because by doing this they also increases
their business. They also said that company would not provide as much as services as
wholesalers because of the limited stocking capacity of the small retailers.

8) Which of the following services provided by the company/ the person from whom
you purchase?

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Services Respondent Percentage

Credit Period 42 70
Discount 49 81.67
Gifts 21 35
Schemes 25 41.67
POP materials 5 8.33
Transportation Facilities 19 31.67
Other 4 6.67

Other; 4
POP; 5 Transportation Credit Period; 42
Facilities; 19
Schemes; 25

Gifts ; 21 Discount ; 49

Interpretation

This question helps us in finding out the service that is presently provided to the
retailers by the party from whom they are purchasing.

Credit period and discount (cash) are the very common service provided to the
retailers by the wholesalers or the company. And as the respondent said on the very
special occasions like Diwali they also get the benefit of the gifts or schemes.

9) Which types of services do you prefer?

Services Respondent Percentage

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Credit Period 47 78.33

Discount 52 86.67
Gifts 32 53.33
Schemes 39 65
POP materials 5 8.33
Transportation Facilities 21 35
Other 1 1.67

Other; 1
POP; 5Transportation Credit Period ; 47
Facilities; 21
Schemes; 39

Discount; 52

Gifts; 32

Interpretation

By asking this question we can know the preference of the respondents regarding
the services from the party from whom they are purchasing.

86.67% of the respondent have said that they would prefer discount because
that’s the service from where they get direct cash benefit while other most preferred
service was of the credit period because it provides the opportunity to the retailers to
stock more than his financial capability.

10) According to you which company has shortest delivery time?

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Company / Brand Respondent Percentage

BSL 10 16.67
Digjam 4 6.67
Donear 5 8.33
Mayur 4 6.67
OCM 4 6.67
Raymond 13 21.66
Reid & Taylor 2 3.33
Reliance 4 6.67
Siyaram 6 10
Other 8 13.33
Total 60 100

Other; BSL; 18
16
Siyaram; Digjam;
11 8
Reliance
;7 Donear;
10
Reid &
Mayur; 8
Taylor; 4
Raymon OCM; 7
d ; 25

Interpretation
The basic idea behind this is find out which has the most efficient distribution
network.

Surprisingly Raymond which is located in Bombay is considered as having the

shortest delivery period rather than the Reliance (Vimal) which is located in Naroda.
Raymond has achieved this shortest delivery period by building a team of good financial
strong wholesalers.

11) From your point view customer prefer to purchase from

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Party Respondent Percentage

Retailers 24 40
Wholesaler 1 1.67
Company’s Showroom 10 16.67
Shopping Malls 25 41.66
Total 60 100

Wholesaler; 1
Shopping Malls; Retailer; 24
25

Company
Showroom; 10

Interpretation

The basic idea behind asking this question is to find out the place from where the
consumers would like to purchase the fabric from the point of view of the retailers.

According to 41.66 % of the respondents the consumer would like to purchase the
fabric from the shopping malls because of the latest shopping trend and according to 40%
of the respondents the consumer would like to purchase the fabric from multi brand
retailers because this is the place where the consumer can have a look at the designs of
more than one brand and have more options to choose from.

Findings
 We found that BSL and Raymond have more demand in the Gujarat region than
the famous brands like Reliance (Vimal) and Reid & Taylor.

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 We have also found from our survey that the retailers stock any brand based on
the demand of that product not based on the price of it or the margin he is getting
from selling of that brand

 Easy salability is the main factor for preferring one brand over other brand
because for selling these types of brands the retailers have to put less effort so his
valuable time and up to some extent money also is being saved.

 During our research work we have found that the wholesaler is the party from
whom the majority of the retailers are procuring the fabric and more of the
retailers have agreed that if given choice they would like to purchase directly
from the company.

 According to majority of the retailers the wholesaler is the person who can
provide them better services.

 Credit period and discount are the two most common services provided to the
retailers and by asking their preference towards services these two same services
are preferred.

 By asking about the shortest delivery time to the retailers we have found that
Raymond is the company which have shortest delivery period.

 From the point of view of the retailers the customer would like to purchase from
shopping malls and multi brand retailers rather than company’s showroom.

Suggestions

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 Vimal is one of the top 3 brands but as we have surveyed only 20 out of the
60 respondents are stocking it so the company has to take some serious steps
to increase the presence of its products on the retailer’s shelf .
 Some of the retailers are also stocking women’s wear and home furnishing
with the men’s wear so the company has to use them in proper way to sell
“Harmony” the home furnishing brand and women’s wear.
 The demand of the readymade garments is increasing so the company has to
concentrate more on that department to capture good market growth. If
possible company can come up with its own readymade brands or collaborate
with ready made garment manufacturer and supply them the needed fabric.
 Reason for not stocking any particular brand as shown is the less demand.
The demand for any product can be achieved through creating the consumer
pool. So the company has to think of creating the consumer pool by the way
of advertising.
 The demand for the cotton products especially of shirting is increasing so we
suggest the company to collaborate with some cotton manufacturer in
shirting and market their product under the brand name Vimal.
 Raymond and BSL have shortest delivery period which are based at Bombay
and Bhilwara respectively. This shortest delivery period is being achieved by
the team of good financially strong wholesalers. Reliance which is based at
Naroda has long delivery period than these two companies. So the company
has to think of aggressive development of wholesaler in all major distribution
centers because these distribution centers reduces delivery time and provide
better services.
 The company has to increase the number of retailers by introducing trade
sales promotion schemes because these multi brand retailers are the person
from where the consumer likes to purchase the fabric.
 Company has to think of selling its products through the shopping malls
because of the trend of consumers going to malls for shopping.

Conclusion
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Although Reliance gets stand in a list Fortune 500 Company and also
considered to be India’s largest private sector corporation, the brand “Vimal” has not
very big market in the area of Gujarat. As we know Reliance also manufactures the fabric
for women’s wear and home furnishing apart from Men’s fabric. But in the area in which
we have conducted our research we had not found even a single retail shop which sells all
the three types of fabric so the company has to do some thing like providing extra
discount to the retailers who purchases all the three types of fabric to improve the current
situation. Apart from that as we have noticed the target segment of Reliance is the person
who falls in to B or C class not A class so the company has to give more franchises in the
small towns. By doing this the company would be able to sell entire range of its products
under the single roof in the small towns also.

Moreover the company has to do something like sales promotion schemes,

Advertisement etc. to improve its sales especially in the area of Gujarat. Reliance has to
spend little more on above mentioned activities to increase the consumer pool. The reach
of the Reliance product is not as much as of other companies’ product so the company
has to build the team of good wholesalers to expand the overall reach and through this the
sales of the company.

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QUESTIONNAIRE

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We are students of MBA at S.K.Patel Institute of Management and Computer Studies,

Gandhinagar. As a part of our academic course we have to prepare a Grand project. We
have decided to do this task through market survey in Textile Industry. For this task we
have prepared this questionnaire. We request you to help us in this task by filling up this
questionnaire.

1) Name Of the Shop: ___________________________________________________

2) Address ___________________________________________________
___________________________________________________
3) You deal in which of the following products
[ ] Men’s wear [ ] Women’s wear
[ ] Home furnishing [ ] other _________
4) You normally stock which of the following company’s brand
[ ] BSL [ ] Digjam [ ] Donear
[ ] Mayur [ ] OCM [ ] Raymond
[ ] Reid & Taylor [ ] Reliance [ ] Siyaram
[ ] Other ___________
5) Please specify the reasons for not stocking other brands.
[ ] High Price [ ] Low Demand [ ] Inferior Quality
[ ] Limited Variety [ ] Less margin [ ] Availability / Services from Co.
[ ] Other_____________
6) Which of the following parameters you prefer most to stock for any company’s
product
[ ] Easy Salability [ ] Product Quality [ ] Pricing
[ ] Brand Equity [ ] After Sales Services [ ] Other __________
7) From whom do you purchase the fabric
[ ] Wholesaler [ ] Agent [ ] Direct from company
[ ] Depot [ ] Other __________

(PTO

8) From whom do you prefer to purchase the fabric

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[ ] Wholesaler [ ] Agent [ ] Direct from company

[ ] Depot [ ] Other _____________
9) According to you who provides you better services
[ ] Wholesaler [ ] Agent [ ] Direct from company
[ ] Depot [ ] Other _____________
10) Which of the following services provided by the company/ the person from whom
you purchase?
[ ] Credit period [ ] Discount [ ] Gifts
[ ] Schemes [ ] POP materials [ ] Transportation Facilities
[ ] Other ____________
11) Which types of services do you prefer?
[ ] Credit period [ ] Discount [ ] Gifts
[ ] Schemes [ ] POP materials [ ] Transportation Facilities
[ ] Other ____________
12) According to you which company has shortest delivery time?
[ ] BSL [ ] Digjam [ ] Donear
[ ] Mayur [ ] OCM [ ] Raymond
[ ] Reid & Taylor [ ] Reliance [ ] Siyaram
[ ] Other ___________
13) From your point view customer prefer to purchase from
[ ] Retailers (Multi Brand Outlets) [ ] Wholesaler
[ ] Company’s Showroom [ ] Shopping Malls
14) Suggestions
_________________________________________________________________
_________________________________________________________________

Thank You

BIBLIOGRAPHY

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Reference Books:

 Sales and Distribution Management By S L Gupta

 Marketing Management (11th Edition) By Philip Kotler

Websites:
 www.ril.com
 www.google.com
 www.rediff.com
 www.indiainfoline.com

Newspaper
 Times Of India
 The Economic Times
 Business Standard

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