By Group 2

Sangam (India) Limited

(SIL) Born of humble beginnings in the year 1984, Sangam (India)

Limited (SIL) today is a business giant with over 10,000employees.

The Group has more than 200,000 spindles and 3000 rotorsfor producing PV dyed yarn, cotton and OE yarn with anenviable reputation for quality, which is underlined by its ISO9001:2008 certification.

Sangam (India) Limited (SIL) is the largest producer of PVdyed yarn in Asia at single location.

The Group is a forerunner in manufacturing ready to stitchfabric with the annual capacity to produce 30 million metersof fabric and 40 million meters of denim.

Established all its spinning and weaving

facilities in Bhilwara.

Procured raw materials polyster

and viscose staple fiber from

Reliance Industries Limited

and Grasim Industries

respectively.

Cheap cost of labor in Bhilwara

town.

The Group's Spinning division is ranked amongst world's largest PV

Dyed yarn industry.

In 1995, the company undertook capacity

expansion increments.

First spinning mill with 17,280

spindles was established in

1995.

Added another 10,368 spindles to its capacity in 1998 followed

by 8,640 spindles in

2000.

In 2002 the total capacity of the spindles was increased to

36,288, in 2003 to 48,384 and in 2004 to 64,032.

50% of SIL’s produce was consumed by the many small and medium textile mills in

Bhilwara town.

Another 25 percent was sold to corporate clients like Grasim, Siyaram’s, Raymonds,

S.Kumar’s, BSL, Donear etc.

Around 13% of the produce was exported to countries like Egypt, South Africa,

Turkey, and the Gulf.

SIL used the remaining produce for captive purpose, i.e., it used this part of the

produce to manufacture fabrics under its own brand name.

SIL procured state-of-the-art

machinery to produce both yarn

and the fabric.

Since 1998, SIL replaced its ageing weaving machines

(nearly 60 in number) by new Sulzor machines

imported from Switzerland.

The modern machines gave SIL

the flexibility to shift from coarse count yarn to fine count yarn during production of P/V

dyed yarn.

SIL is an ISO 9002 certified company

and kept its product quality in

tune with the customers’

requirements.

SWOT ANALYSIS

Strengths

Domestic market

Skilled workforce

Barriers of market entry

Healthy relationships with world class suppliers

Location of industry

Latest technology

Pro-active management

Weakness

Investments in research and development

High debt burden

Opportunities

Dyed yarn market has a huge potential in textile industry

Availability of world class suppliers in vicinity

Huge scope of global expansion

Threats

Indian textile products were costlier

Increasing competition (specially from China)

Cost of raw materials was increasing

Performance of SIL

Polyester/Viscose dyed yarn was 5% of textile industry in 2005

SIL was market leader with 20% market share

Largest manufacturer of P/V dyed yarn in country

Achieved success in just 10 years

Capacity: 17280 spindles in 1995 to 64032 in 2004

Relation to BG Matrix

Future Position of SIL

Capacity expansion with investment of Rs.400 crores Decided to install 50,000 spindles more

Expansion of fabric capacity by another 100 looms

Plans to venture into production of quality cotton yarn

Hopes to achieve a turnover of over Rs.8 Billion by 2008

Expect Sales to grow at a CAGR of 37% 2005-08

Relation to BG Matrix

Relation to BG Matrix

Reasons for argument

For High Market Growth

Investment to match increased demand

For Low Market Share

Government’s Incompatible tax structure

Increasing competition from China

In 2006 China was biggest competitor

Discuss the changes in the export environment of

the Indian textile industry in general and that of

SIL in particular. What strategies can SIL adopt to

overcome the Chinese competition in the global

textile export market?

Changes in the export environment of Indian

textile Industry and initiatives by SIL

Textile industry was suffering from export restrictions or quota

by WTO

Quota regime was eliminated in January 2005 and presented

greater opportunities for textile manufacturers

SIL anticipated the change and increased production since

1990’s

SIL began targeting US and Europe and believed in

increasing volumes

SIL decided to venture into high quality cotton yarn

SIL decided to enhance capacity to meet existing and future

demands

Strategies SIL can adopt to overcome the Chinese

competition in the global textile export market

SIL spending more in infrastructure

SIL concentrating on high quality products

SIL investing in R&D to come out with value added

products

SIL initiating aggressive marketing and selling for brand

recall of its products

QUOTA ELIMINATION

Quota was a government-imposed trade restriction

Quota in all textile trading was abolished by WTO in

2005

All garments and fabrics are traded freely into

the European Union (EU)

Beneficial for fabric manufacturers because now there

are fewer restrictions

Most benefits to the SME’s of India and Pakistan

Developing a marketing strategy for a long run

competitive advantage.

Backward integration strategy to control costs and gain

economies of scale

Growth through phased capacity expansion and

introduction of higher value products

Importance of selecting a proper manufacturing

location

Systematic financing for the company's growth

The Polyester/Viscose dyed yarn market in India

The caselet focuses on the company's success story in the polyester/viscose (P/V) dyed yarn market in India.

It highlights the various growth strategies adopted by the company that led to economies of scale, increase in market share and profitability.

The caselet also focuses on the measures adopted by the company to manage the changes in the economic and legal environment and become a leader in the textile industry in India