A STUDY ON EXPORT MARKET POTENTIAL FOR COTTON YARN OF M/S.SANGHI SPINNERS INDIA LIMITED IN EUROPE AND SOUTH EAST ASIAN COUNTRIES.

MASTER OF BUSINESS ADMINISTRATION DR.B.R.AMBEDKAR OPEN UNIVERSITY HYDERABAD.

BY R.JANARDHANA NAIDU Reg.No.2398021226.

Under the guidance of Dr.Y.KRISHNA MOHAN NAIDU Faculty

DEPARTMENT OF BUSINESS MANAGEMENT DR.B.R.AMBEDKAR OPEN UNIVERSITY HYDERABAD.

DECLARATION

I hereby declare that the project report entitled A STUDY ON EXPORT MARKET POTENTIAL FOR COTTON YARN EUROPE AND SOUTH EAST ASIAN COUNTRIES, a case study of SANGHI SPINNERS INDIA LIMITED has been done by me as a part of the requirement for the award of Master of Business Administration degree and this work is original.

Place: Hyderabad Date:

R.Janardhana Naidu

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CERTIFICATE This is to certify that the project report on A STUDY ON EXPORTMARKET POTENTIAL FOR COTTON YARN OF M/S.SANGHI SPINNERS INDIA LIMITED IN EUROPE AND SOUTH EAST ASIAN COUNTRIES is prepared and submitted by Mr.R.Janardhana Naidu, in partial fulfillment for the award of Masters degree in Business Administration of Dr.B.R.Ambedkar open university, Hyderabad. It has been carried out under my guidance and this is his original project work.

Place: Hyderabad Date:

(Dr.Y.K.M.Naidu)

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TO WHOMSOEVER IT MAY CONCERN

This is to certify that Mr.R.Janardhana Naidu of Dept. of Business Management, Dr.B.R.Ambedkar University. He completed his project work entitled A STUDY ON EXPORT MARKET POTENTIAL FOR COTTON YARNOF M/S.SANGHI SPINNERS INDIA LIMITED IN EUROPE AND SOUTH EAST ASIAN COUNTRIES. Wishing all the success in his career. For SANGHI SPINNERS INDIA LTD. (K.SRINIVASAN) Director (Technical).

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ACKNOWLEDGEMENT I sincerely thank Mr.Dr.Y.K.M.Naidu, Faculty of commerce Dept. of Business management, for his valuable guidance and encouragement in preparing this project report. I sincerely thank the management particularly Mr.k.Srinivasan, Director Technical, Sanghi spinners India Ltd., for permitting me to undertake and complete this project work under his valuable guidance, motivation and suggestions. Lastly I thank my friends and colleagues who helped me in completing this project report successfully.

Department of Business Management Dr.B.R.Ambedkar Open University Road No.46, Jubilee Hills Hyderabad-33. R.Janardhana Naidu.

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CONTENTS Page NoChapter-I a) Introduction 7-11

b) Need of the study c) Statement of the problem and Hypothesis Chapter-II Profile of the company Chapter-III Theoretical background on Market Potential Chapter-IV Existing system in the organization Chapter-V Data analysis Chapter-VI a) Findings b) Suggestions c) Conclusion Annexure Bibliography 49-53 54-55 46-48 43-45 39-42 27-38 12-26

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Introduction:The topic selected A Study on Export Market Potential for cotton yarn of M/s. Sanghi Spinners India Ltd. In European and Southeast Asian countries. The purpose of study is to highlight the growing potential markets abroad for the cotton yarn manufactured in India. There is a disparate need in India for the growth of Industry for the employment for its teaming millions of people a need for Technology up gradation and also creating a skilled work force. By producing more quantities of yarn and also comparatively best quality at par with the International standards. We can make our product most sought after by the International buyers. Basically cotton yarn is natural product and chemical free which suitable to wear in any type of climatic conditions and protect skin and body against various chemical reactions when compared to the synthetic and other manmade yarns like acrylic yarns. More over it is environment friendly in usage and its disposal. Market Potential: The market potential refers to optimum sale volume that can be reached any further increasing the sales in the given environment. A manager can assess the worldwide and countrywide market potential for cotton yarn. Ex. For using seconds and historical data on cotton yarn exports to the European and South East Asian countries. We have to estimate increase their GDP, Per capital income and taste and preferences of the customers. Any foreign country before placing orders and procurement material from us first they study the outlook of the company and the systems followed, as per International standards are not. Moreover they see strengths and weaknesses about us and weather in longstanding sustainability possessing are not and also present system of approach towards quality improvable and also see the production process how monitoring and controlling the customers complaints and repeated8

quality complaints. Here for manufacture of cotton yarn from raw material cotton. Even some customers will see the way of procurement and selection of raw cotton of raw cotton. The study will prompt even other potential farmers to undertake cotton cultivation, as they will have good demand for their product. The other potentiality entrepreneurs can take-up these spinning industries for their ultimate profits and in the process. There will be employment generation for the people earning for their country and foreign exchange. Need of the study: M/s. Sanghi spinners India Ltd. (SSIL) is 100% export oriented Unit (EOU) with a production capacity of 1 lakh spindles under one roof on an average of 50 MTS per day production. Largest spinning in south east Asia and following internationally recognized ISO 9001 and ISO 14000 systems. SSIL is accredited with the status holder of Viz. export trading house and received best exporter award from A.P. by Visakapatnam Special Economic Zone (VSEZ) in the year 1999-2000. And also received higher manufacturers award in spinning industry in the year 2001-2002 by Federation of Andhra Pradesh Chamber of Commerce and Industry. The need of the study of the topic as its own importance to promote cotton yarn exports to European and Southeast Asian countries to know the further promotion and export potential in European markets basically European markets challenging and stiff competition faced by the country. However to overcome the problem to capture entire market potential in the globe. The ever-growing markets in European and South East Asian countries for cotton yarn and their dependency countries like India for its quality products availability of resources timely schedules, deliveries and honoring commitments.

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Statement of the problem and Hypothesis: There is a lot of demand for cotton yarn from India to European countries and South East Asian countries Presently we are meeting only a part of its requirements (Demand). There is a lot of scope for further expanding of our exports to the abroad markets. European markets are very quality conscious and they are offering good and competitive prices and comparative other markets. To meet the quality parameters the following remedial measures may be undertaken by this unit, while procuring raw material (cotton fibers) uniformity is required in length, Strengths, colour of the fiber and moisture content should be within limited allowable limits. Cotton growers may be encouraged to take-up cotton forming to maintaining good quality of seeds uniformity from seeding to yielding time also they may be encouraged to take-up forming in large tracts of land.Objectives of the Study:

1. To find out how best we can capture the European and Southeast Asian Markets. 2. To Study the competitive situation in the export market for our country mainly due to competition from china Pakistan. 3. To identify the steps to be adopted to enrich the textile field. Scope of the study: Scope is mainly the cotton yarn production and market; Government policies will be covered with regard to the regulations and benefits offered by them and also the relief measures expected from them. Methodology and Database: The collection of data will be from M/S.Sanghi Spinners India Ltd., fast performance and also the data available from textile committees, cotton textile export promotion councils and related industries.10

Period of study: The period under of this project will be for the past 3 years i.e. 2002-03 2003-04 2004-05

RESEARCH METHODOLOGY The Methodology adopted in collecting, gathering and interpreting data includes: (i) Net surfing (ii) Personal discussions.

SOURCES OF DATA The data collected are from: (i) (ii) SCOPE This study cover the export procedures followed by export companies in general and the export procedures followed by Sanghi Spinners India Limited in particular. Primary sources - Company's case file and records, Secondary sources - Publications and books.

f) LIMITATIONS Due to the non-availability original documents used in export procedures' specimen documents are enclosed which taken from the books on Export Procedures and Documentation

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ORGANIZATION PROFILE SANGHI INDUSTRIES AN OVERVIEW From the modest beginnings/ Sanghi has grown to become a multi-product/ multi-faceted industrial house today. In a short time, it has emerges as one of the pre-eminent groups in the state of Andhra Pradesh.In this process Sanghi has set13

trends/ broken records/ and became synonymous as a "Group with golden touch". The reason for Sanghi's success has been many, The employment of the latest technology/ state-of-the-art plant and machinery/ stringent quality control to ensure products customizing to International standards, and a total commitment to the customer. Sanghi is committed to excellence. And this commitment is reflected in Ms diverse activities/ such as/ PVC Leather Clom PVC Sheeting Electrical Insulation Tape BOPP Self Adhesive Tape Label Stock Heat Resistant Rubber Thread Polypropylene Yarn & Fibre Tortile Processing Polyester Filament Yam Zip Fasteners Plantations A Rs 3000 million Group poised to leap to Rs 700 million in 1993-1994 and beyond. The Sanghi group is spreading its wings to seek new horizons of growth. Ready to meet the demands of day. And challenges of tomorrow,

TECHNOLOGY: At Sanghi, success has been achieved through high technology. In each of its plants, Sanghi has employed the world's latest technology. And plan* and14

machinery from world's renowned suppliers. The Sanghi's philosophy of keeping tip with technological advancements worldwide has resulted in constant technology up gradation, modernization and assimilation of the state- of art production and quality and quality control techniques, Every Sanghi product undergoes stringent quality checks- right from the new material state to the finished product and the watchful eye of ova quality control inspectors ensures that nothing bust the very best leaves the factory. No wonder/ Sanghi products are acclaimed for their high quality. Quality mat has won me acclaim of tile most discern customers in India & abroad. NAUTURE: At Sanghi we are forever committed to growth & diversification Constantly identifying new opportunities, looking out for new challenges has become way of life. Guided by the vision and rare foresight of Mr. Ramsharan Sanghi its founder, Sanghi looks ahead to an exciting future of growth & prosperity. In the years ahead, Saaghi. Will venture into cement, power plants; petrochemicals and other areas in the core sector. In addition to the expanding and further integrating their existing operations, Indeed at Sanghi, even the sky is not the limit.

Sanghi industries has got 9 groups of companies. They are as follows;

Sanghi Textile Processors (P) Ltd Sanghi Zip Fasteners (P) Ltd Sanghi Leathers (P) Ltd Sanghi Threads (P) Ltd Sanghi Filaments (P) Ltd Sanghi Polyesters (P) Ltd

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Sanghi Plantations (P) Ltd Sanghi Cements (P) Ltd Sanghi Spinners (India) Ltd SANGHI SPINNERS (P) LTD Sanghi Spinners is one of the finest and most sophisticated spinning units in India Established in me year'1997, a has been exporting world class quality yam to various countries across the globe. Equipped with 1,00,000 spindles totally automated state-of-art plant and machinery, this 100% export oriented unit is a Jewel in me Sanghi conglomerate crown- Situated in Sanghinagar, Sanghi groups very own industrial township/ It is one of the largest spinning mills in India. 30 tons away from the city of Hyderabad. Sanghi's latest venture aims to put India on a pedestal in the words cotton, yam market A mega international size 2,00,000 spindle cotton yarn unit being set up at a capacity outlay of Rs 3500 million This mega spinning project will incorporate the world's state-of-art plant and machinery from. Manufacturers if international reputation in. Germany, Japan and Switzerland-It will be equipped with me latest testing quality control facilities. M/s Giherzl textile of Zurich^ Switzerland has conducted an in-depth market study of cotton yarn requirements worldwide to enable the company to arrive at a most appropriate and profitable product mix. The unit with an output of 26,000 TPA will vastly benefit India's foreign exchange earnings- and benefit farmers by way of increased cotton consumption and local populace by way of employment opportunities.

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Sanghi Spinners will mark a major milestone in me Indian textile industry and constitute an important step towards propelling India to a status of an industrial giant in textiles. It is a self-contained township with captive power plants, communication facility, transportation, labour accommodation, hospital/ food marts, entertainment facilities, post office/ etc. A spinner has the location advantage of being in the heart of India in. the largest cotton growing state it has the added advantage of easy access to ports of Mumbai and Chennai. UNMATCHED RANGE Sanghi Spinners is an extraordinary unit that produces a wide range of counts under one roof They range from No 16 to No 80s in 100% cotton combed and corded, polyester, viscose blended polyester/cotton yams, etc,/ as single and, doubled yarns for knitting (hosiery), weaving, sewing thread etc. TECHNICAL SUPERIORITY Sanghi Spinners boasts of international standard spinning technology, all assembled under one roof The state-of-art machinery acquired from select countries comes from Germany, Japan, Switzerland, Italy, France and USA All specialists in their respective technology and machine manufacturing. The plant and machinery is also installed by foreign technicians and has since been working with precision. SPANNING THE GLOBE Sanghi Spinners has spun its magic around the globe/ creating a demand for its quality products practically in Europe, Asia, South America and North America continents of the world. To name a few countries like Germany, Czechoslovakia, Taiwan, Thailand, Portugal, Spain, Italy, Switzerland, Dubai/ china, Indonesia, Belgium, Korea, Hong -Kong, Egypt, Mauritius, Chile/ brazil Canada, Israel,, etc. m India our disentitle includes deemed export factories and organizations. TOTAL AUTOMATION

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Total automation and mechanization a pre-requisite to ensure good quality and contamination tree yam is our trademark Towards achieving this, nulls are equipped with automated ginning plant with roller gins for indigenous cotton Automatic cotton evacuation system promotes dust free, clean environment and alluring frames are equipped with individual over head clearing system. To ensure uninterrupted production, the mills have installed generators to take carp of power supply. RAW MATERTAL:In keeping with quality standards, Sanghi Spinners is having its own ginning and uses test raw nationals to turn out the finest end product name MCTJ5 -long staple length of 40's and above counts. Apart from that quality Indian cottons like shankar, far coarser count 30 below. Also to meet superior quality needs, imports are made from VSA and West Africa especially for hosiery and weaving.

QUALITY ASSURANCE: Sanghi's hi-tech machines produce top quality yarn of international standard/ packaged in cone form. Each cone carries pre-determined standard lengths of -per customer requirement. The cones are weighed, quality of" yam and winding checked under normal and ultra violet rays before delivery. Testing lab continuity checks the product from raw material stage, to mid process to finished product.

MANPOWER: To compliment the high end technology Sanghi Spinnersemploys technicians and workers with sufficient experience and exposure in Operating advanced systems. Even' effort is made lo train the non-technical staff18

also about the technicalities of production process for better utilization of manpower. CERTIFICATE OF EXCELLENCE: Sanghi Spinners claim to fame and international acceptance systems from a string of quality certifications bestowed on it by various international organizations. ISO 9002 certification, (By certificate no- KIN 400 AQ 1640) was acquired by Sanghi Spinners for having confirmed to ""Quality Management Svstem Standards". . .ISO 9002 for spinning and supply of cotton, polyester, viscose blended yarns on 27th September, 1997 by DerNorske Veritas (DNV) Holland. Setting a record of sorts, Sanghi Spinners is the first to receive ISO 14001 certification by DNV. It has been found to conform to the;'Environment management system standard". ISO 14001 - (certificate no, RIN 400 AE i033) concerning all activities to supply or cotton, polyster cotton and polyster viscose blends yams from October 2002. The mill is now in the process of getting ready for OEKO_TLX certification for the entire mill, from England, UK. SANGHI GROUP: Sanghi is one of the Fortune 50 Group of companies is a name to reckon with in the industries world. A Rs-25OO crore conglomerate, it has established its presence in even' sunrise sector of business, be it polystor, cement. Textile', Zip fasteners. Polypropylene Yam, Rubber Thread, Publishing or software. Creating success from success, it is poised on the threshold-taking plunge into other ambitious ventures like petro chemicals and other high-end business. AWARD AND RECOMMENDATIONS:

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In recognition of its consistent quality and unwavering standard Sanghi Spinners has been bestowed with numerous awards. These awards along with patronage from customers in the form of repeat orders over the years have been the feathers in the cap for Sanghi Spinners, doing it justly proud of its product and performance. The awards has come at regular intervals, recognizing every effort: of Sanghi Spinners at excelling it self. Some of the significant recommendations are; Recognized as Trading House, with effect from 1st April 1999.

1999-2000: Export Turnover Award from Ministry of Commerce, Govt of India; Commerce and export Promotion wing, Govt of Andra Pradesh: Federation of Andhra Pradesh Chambers of Commerce and Industries (FAPPCI) and other organizations.2000-2001: Best Exporter Award (Stan-is-hokier textiles) and Award in Appreciation for highest capital Investment, achieving ISO 14001 certification and Best Industrial Productivity effort in Textile sector from Ministry of Commerce, Govt of India; Best Industrial Productivity effort from FAPPCI. 2001-2002: Best Environmental Improvement Effort Award from FAPPCI. These certifications, awards and the consistent patronage of its worldwide clients speak volumes for Sanghi Spinners. OBJECTIVES OF SANGHI SPINNERS (INDIA) LTD: 1. To modernize the existing plans and equipment to adopt latest technology in the field of manufacturing. 2- To make the optimum utilization of resources and fro provide opportunities to the personnel for the development and career growth. 3. To make the people work as a system to attain the goals of the company.

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4. To minimize the cost of production and maintain standard quality. 5. To achieve customer satisfaction by improving the quality of products. EXPORT PROCEDURE GENERAL Having sent out letters and leaflets, it is necessary to be prepared to answer in a proper manner the Enquirer that will be received as a result of these first efforts. No price lists would have been sent in the first instance, and interested parties abroad will ask for these and also for payments terms and possibly for agency conditions. There will also be requests for samples. STEPS OF EXPORT PROCEDURES: Step_I: Receipt of Enquiry The best way to do this is to ask the Enquirer's themselves to supply information about their business, stating (i) Whether or not they already handle any competing products; (ii) How long they have been in that business; (iii) What area of their country they cover for sales purpose; (iv) Whether they intend to purchase goods on their own account or Whether they intend to act only as commission agents; (v) What other products they already sell; and (vi) The names and addresses of at least two firm which they already represent or have represented in the past, If the Enquirer is well established, he will be glad to give the information asked for, but if he refuses to do so/ than itself is fairly good' evidence that his intentions are not good. The exporter, after having satisfied himself that the Enquirer abroad is a fit person to represent him and is capable of meeting his obligations, should provide

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him with a price list. Giving details of the terms of business and payment which he is expected to adhere to. Step II: Check on Restrictions on Foreign Exchange and Import in Importer's Country When an order is received, the first decision as to whether it will be filled is based upon the approval of credit. The approval of the order for shipment should also be contingent upon the ability of the customer to secure foreign exchange in those countries where there are exchange restrictions. Step III: Scrutinize the order. The exporter should carefully scrutinize and check thecontents of an export order before its conformation. It should broadly be in accordance with the 'element', which might have been conveyed to the overseas buyer, and received along with the duplicate copy duly, signed, of the export contract, in case the exporter sent contract.

(A) Terms of Payment: a) Payment will be available in India. It implies that L/C issued by a foreign bank must be confirmed by Indian bank; b) Documents stipulated in L/C will be submitted to an Indian bank in India. c) Drafts to be drawn under L/C are to be Usance or Sight drafts, and to be drawn on the bank or the buyer. d) Credit validity period is sufficient for the collection of relevant documents. e) Payment is permissible according to exchange control regulations. (B) Documents: (a) Commercial and/or consular invoice and customs invoice.

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(b) Clean on board bill of lading. (c) Certificate of origin in general, or for availing GSP concessions. (d) Packing list. (e) Marine insurance policy. (C) Delivery Schedule. Inspection of goods. The pre-shipment inspection stipulated by the buyer is to be effected by the Export Inspection Agency (EIA) and/or any other agency. (D) It has to be seen whether labeling/packing requirements are usual or some special type of packing is to be effected. StepIV. Acknowledgment of the order another step in filling the order is to acknowledge it. It may seem pointless to acknowledge an order before the manufacturer or exporter is able to state definitely when or, in fact, whether he will be able to fill it. In short, the acknowledgement should contain the essential facts concerning the shipment, which the importer should know. It should reassure him that any special instructions, which he may have given, have been properly complied with. It should indicate to him approximately when his shipment may be expected to arrive and through which bank he is likely to receive his documents.

Step V: Arranging the Goods - Export Production/Procurement

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As soon as the export order has been confirmed or finalized, preparations are made for the procurement of the goods to be exported, The manufacturer exporter has to raise an internal indent on the production department/division, which may also be sent either to the works Manager or the Factory Manager. The indent should contain the description of the goods given in the export order, together with a copy of the instructions given by the importer. Step VI: Export License If the item being exported requires an export license, the exporter from the licensing authority, i.e., Chief Controller of Imports and Exports, should procure the same. Step VII: Central Excise ClearanceThe excisable goods can be exported outside India either under claim for rebate of excise duty or under bond. The difference between these two procedures is that in the case of former the duty is first paid and its refund claimed after exportation, and in the latter case the goods are allowed to be exported without payment of duty provided a bond is executed in form B-I (General Security) or form B-I (General Surety).Step VIII: Apply to Export Inspection Council for Inspection

Exporter should apply to EIC for pre-shipment inspection. Under the Export (Quality Control and Inspection) Act, 1963, the EIC will depute an inspector for carrying out quality control and inspection of exportable products.

Step IX: Apply for Marine Insurance Policy, if it is a C.I.F. Quotation

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As soon as the goods are ready for export, the exporter has to apply to insurance company for an insurance cover/policy, as the case may be, where the importer insists upon an insurance policy, an insurance cover will not do. The policy would be for C.I.F. value plus 10 percent to cover expenses. The exporter should obtain the insurance policy in duplicate. Step X: Issue Instructions to the Clearing and Forwarding Agent A detailed note is prepared for the clearing and forwarding agent, giving instructions regarding the shipment of the consignment. Step XI: Clearing and Forwarding Agent's Role for shipping and Customs at the Port. On receipt of the above documents, the clearing and forwarding agent takes delivery of the consignment from the railway/road authorities and arranges for its storage in a warehouse. Step XII: Documents Returned by the Forwarding Agent The clearing and forwarding agent return the master document to the exporter at this stage along with; (a) Shipping bill; (b) Original L/C (Contract) order; (c) AR-4/AR-4A form in duplicate; (d) Full set of clean-on-board bill of lading together with the required number of non-negotiable copies.

Step XIII: Shipment Advice to Importer25

Intimation is sent to the importers, indicating the date of dispatch of goods and the name of the ship by which they have been sent. (I) A non-negotiable copy of the B/L; (ii) Master Document copies, Step XIV: Presentation of Documents by the Exporter to Bank The exporter for negotiation/collection now presents the following documents. (a) Master Document; (b) GR-I form (duplicate and triplicate); (c) Full set of clean-on-board bill of lading; (d) Original L/C; (e) Bank certificate in prescribed form (in duplicate); (f) Marine Insurance policy (in duplicate); (g) Export contract/order; and (h) Bill of exchange, Step XV: Processing of Documents by the Bank Bank examines the documents with reference to the terms and condition's of the original order and also of the letter of credit. (a) Master Document (Original copy); (b) Marine Insurance Policy; (c) Negotiable Bill of Lading (original copy); (d) Bill of Exchange (original copy).

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The bank returns the following documents to the exporter: I. Original copy of the bank certificate; and II. Attested copies of the Master Document. The exporter receives payment against the above documents. Step XVI: Central Excise Rebate A claim is filed by the exporter with the concerned maritime collector of Central Excise for rebate on the central excise duty or for getting credit in his bond account, as the case may be. Step XVII: Advance_LLcense/Specjal License The exporter should file an application to the licensing authority for an advance license/special license in accordance with the export-import policy of the country at that point of time.

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Theoretical background of the Market potential: What is my market potential? The principles of determining market share and market potential are the same for all geographic areas. First determine a customer profile (who) and the geographic size of the market (how many). This is the general market potential. Knowing the number and strength of your competitors (and then estimating the share of business you will take from them) will give you the market potential specific to your enterprise. The Market Potential database is designed to help companies understand, predict, and influence consumer behavior by providing insight to make informed decisions about where to offer products and services with the highest growth potential. Businesses use market potential data too o o o o o

Optimize merchandise mix. Decide where to expand most profitably. Invest marketing dollars more effectively. Increase market share. Help establish sales quotas and revenue goals. Develop successful advertising and target market plans.

1.Measure Demand for Your Products and Services The ESRI Market Potential database includes data for 2,200 items organized into 35 categories, representing goods, services, attitudes, and activities collected by Media mark Research Inc. (MRI) Double base 2004 database. Market potential data measures the likely demand for a product or service. Files include the expected number of consumers and a Market Potential Index (MPI). 2.Explore and Order Data Review the tables and variables available for this database in the Community Data Catalog. Data from the catalog can be selected, organized, and customized to meet

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your requirements. Prices are based on your needs and criteria. If you would like pricing information, we'll need to know3.The data you need testing the Market for Potential Customers?

When selling a product, what is the most important part of the business model? Who buys the product, uses it, and puts money in the inventor's bank? The customers who will be purchasing the product are the most important part of an inventor's market approach. Instead of saying, "If you build it, they will come," the inventor should ask, "If I build it, will they come?" and "why?" 4.Who is the product for? Inventors must decide exactly who will want this new product - the target market. A target market is defined by breaking up the overall market into segments, groups of potential buyers who share certain characteristics. What are their demographics? Knowing this vital information not only helps the inventor know who potential customers are, but also leads the way for all strategic marketing endeavors. Understanding how much to charge, what payments to take, what product literature should look like, and where to sell the invention all arise from knowing the customer? 5.Why will they buy it? What is the unique, compelling benefit of the product? This is usually the trickiest question for technology-oriented people because they tend to think of the technology itself as the answer. The truth is that people buy products, not technologies. The correct answer to this question is a benefit, not a feature. What need does the product fill, and do prospective customers have this need? This seems obvious, but false perceptions of the market can prove a costly mistake. Inventors should survey potential customers for their thoughts on the supposed need. More than likely, the inventor will have a good idea of product potential because they saw the need for the invention in the first place. But it doesn't hurt to

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be cautious; maybe other people don't have the same need the inventor has projected. 6.Who will they buy it from you? Is there something special about the product an inventor is offering? The inventor must set themselves apart from their competition and find the reason(s) their customers should buy from them. This is their source of competitive advantage. Is the product better looking, a better value, more personal, higher quality, smaller, lighter, more versatile, or better designed? Identify the key characteristics about the product that are highly valued by the target market and make it the reason why they buy from you. Can customers go without the product, or by buying it from somewhere else? The inventor needs to have a strong idea of why people will come to them for this new product, what makes them special. Recognizing this niche proves to be priceless when competing against others in a race to market. If one person has a better grasp of why they are special and will succeed, they will overtake their competition because others will believe in them as well. 7.Testing the Market Potential Customers When selling a product, what is the most important part of the business model? Who buys the product, uses it, and puts money in the inventor's bank? The customers who will be purchasing the product are the most important part of an inventor's market approach. Instead of saying, "If you build it, they will come," the inventor should ask, "If I build it, will they come?" and "why?" 8.Who is the product for? Inventors must decide exactly who will want this new product - the target market. A target market is defined by breaking up the overall market into segments, groups of potential buyers who share certain characteristics. What are their demographics? Knowing this vital information not only helps the inventor know who potential customers are, but also leads the way for all strategic marketing endeavors. Understanding how much to charge, what payments to take,31

what product literature should look like, and where to sell the invention all arise from knowing the customer. 9.Why will they buy it? What is the unique, compelling benefit of the product? This is usually the trickiest question for technology-oriented people because they tend to think of the technology itself as the answer. The truth is that people buy products, not technologies. The correct answer to this question is a benefit, not a feature. What need does the product fill, and do prospective customers have this need? This seems obvious, but false perceptions of the market can prove a costly mistake. Inventors should survey potential customers for their thoughts on the supposed need. More than likely, the inventor will have a good idea of product potential because they saw the need for the invention in the first place. But it doesn't hurt to be cautious; maybe other people don't have the same need the inventor has projected.10.Why will they buy it from you?

Is there something special about the product an inventor is offering? The inventor must set themselves apart from their competition and find the reason(s) their customers should buy from them. This is their source of competitive advantage. Is the product better looking, a better value, more personal, higher quality, smaller, lighter, more versatile, or better designed? Identify the key characteristics about the product that are highly valued by the target market and make it the reason why they buy from you Can customers go without the product, or by buying it from somewhere else? The inventor needs to have a strong idea of why people will come to them for this new product, what makes them special. Recognizing this niche proves to be priceless when competing against others in a race to market. If one person has a better grasp of why they are special and will succeed, they will overtake their competition because others will believe in them as well.

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11.Testing the Market Survey Potential Customers

Entrepreneurs planning to launch a new product or service should conduct a market survey to evaluate its feasibility (Clark). Surveys are powerful tools that, if used effectively, can show important insight into the world of doubt. Travis Landers, a recent University of Texas BBA graduate and entrepreneur, uses surveys as a benchmark for successful market analysis. After receiving funding for a business plan offering travelplanning services, Landers conducted an in-depth email survey of 180 college students from around the country. He used the survey to ask his prospective market what they thought of his business plan and idea. From the survey information taken, Landers completely reshaped his business model to match the needs of the market. Again, the key to success knows the customer. Surveys help inventors more easily shape their product offering and feel to fit the needs of their target customers. Surveys ask important questions from a random sample of the target population, and are one of the easiest ways to judge a potential market (Landers). As mentioned above, surveys can help figure out how much the public is willing to pay for a product, which is often more than it costs to make it. There are numerous reasons to use a survey, a few examples include finding:

What services are most important to customers? How much would customers pay? Where do customers go for products? What product attributes affect consumer purchases? What form of payment do customers prefer? There are several methods for conducting market surveys, but they all stem from the same purpose: finding useful information. Most surveys ask quantitative questions to allow easy statistical calculations (Landers). For example, one question might read, "On a scale of 1-10, how much do you like going to the movies." The survey participant answers with a one33

through a ten. Asking questions quantitatively also makes it very simple for users to take the surveys and doesn't leave much room to make up answers (Landers). Surveys can be given in any form. The most popular mediums are via telephone, handouts, email, web sites, and in person. One inexpensive but effective technique for assessing the strength of demand for a proposed product or service is conducting in-person or telephone interviews with potential key customers. Direct mail surveys and participation in trade shows also help an inventor gauge the market while a two-tier approach involving cold calls allows them to solicit more accurate, in-depth responses from target customers (Clark). By implementing a market survey, and correctly understanding its results, an inventor will have an understanding of what needs to be done for product success.12.Testingthe Market How Much Will They Pay?

When hoping to provide a product to the masses while covering incurred costs, it is obviously necessary to charge a price, but how much? What is that perfect amount, taking into account supply and demand, which will keep both the inventor and customer happy? Pricing is determined most by what potential customers will pay, irrespective of what method you use - and perceived value can differ greatly from actual value (Asia Africa Intelligence Wire). The key to product pricing lies in knowing the customer's needs, as well as their demographics. It should be centered on the marketplace and what is essentially feasible for consumers. How much money do they make, what is their money already spent on? If in doubt about pricing, it is wise for inventors to start with a higher price and reduce it later, as it is more difficult to increase your price. If unsure, introduce the product or service at a special introductory price for a limited time (Asia Africa Intelligence Wire). To know the magic price before actually being in the market is impossible, but there are several methods that34

can be used to assess the potential price. The most common methods for determining price are the cost-plus model and the competitor model (Asia Africa Intelligence Wire). Cost-Plus Model - With this method, all costs to make the product are added up and a percentage mark up is included for profit to reach a good final price. Take costs and figure out how many products at a certain price will cover them. The point where sales cover costs is called the break-even point. It is calculated by: Number Units Sold (Unit Price - Variable Unit Costs) - Fixed Costs = 0 This is a good point to start from. With the Cost-Plus Model, a price can be set to at least cover costs, and increasing from the base price can attain a desired profit. Competitor Model - The name says it all for this model. By discovering what competitors are charging successfully for similar products, it becomes easy to see what the market considers an acceptable price. However, don't blindly apply the formula. Some competitors may be about to go out of business because they can't sustain enough orders to maintain low margins, and inventors don't want to repeat their mistake (Asia Africa Intelligence Wire). Another way to set the price is to learn what people will pay for the product or service. A good way to go about this is to survey potential customers. Pricing is a difficult part of testing the market, but a very important one. Inventors should spend a good amount of time gauging the market for pricing purposes. Do your homework, set a price, be creative with your offer and monitor the response. That way, you can change your price to suit the market, but most of the guesswork will be eliminated (Asia Africa Intelligence).

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13) Testing the Market Barriers to Entry: Another important market concept to understand is barrier to entry, which can be valuable to an inventor because it protects them from competition. The meaning can be inferred by the title; a barrier to entry is some intellectual or physical barrier that makes it difficult or impossible for a person or company to sell a product or enter a market. For example, imagine that the start up cost of making a product is $1 million. This cost barrier can prevent many inventors and companies from developing this product. The cost acts as a barrier to entry. There are many examples of these barriers; anything deterring competitors from entering the market is a barrier to entry. Patents offer a 20-year barrier to entry for any new product disclosed to the government. Once a product is patented, no other person or company can profit from the idea. Inventors can use their barrier to entry as a competitive advantage, therefore receiving payment for innovation. Here are some good industry examples of barriers to entry:

Microsoft mogul Bill Gates has warned Latin American computer industry representatives that the lack of skilled labor may be the biggest trade barrier that the region needs to overcome to maintain economic development (Hall).

Microsoft has been found to be involved in predatory behavior using its monopoly power. There is a barrier to entry due to popular applications, which allows Microsoft to charge more for its product (The Economist).

Incumbent firms in a given industry function as barriers to entry when they prevent some lower cost producers from entering the market by negotiating long-term contracts with buyers. Buyers gain transfer surplus from such contracts without affecting their current assets. These conditions indicate more entry as a greater cost. However, such long-term contracts actually define cost signaling with less market entry (Ziss).

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Through these examples, it is easy to see that almost anything can serve as a barrier to entry. Whether a product is hard to develop, or there is a patent, or the upstart costs are too high, or labor in the workforce doesn't want to work, or the government isn't stable enough to support an economy, barriers to entry almost always exist. The important thing for an inventor to make sure of is that they are using these barriers as weapons of defense, not being shut out by them. 14). Testing the Market Know the Competition Competition is the driving force behind the success of our free market economy. Competition keeps companies from over-charging, selling poor products and controlling entire industries. Competition promotes new and exciting discoveries, and inspires each company to try and out-perform the next. Because the structure of our economy is bound to competition, inventors must follow suit. Before taking a new product to market, inventors must investigate potential rivals. Who is the competition? Any person, inventor, or company that has a product similar to a new invention poses a threat to product success. Are there similar products on the market; are there patents for similar products? Are there companies in a particular industry that might be upset with the new invention? Are there companies who will steal the new idea for them? Answering these questions will help inventors better understand their market and come up with reasons why their product is newer, bigger and better for their customers. 15) Preparing Market Legal Protection It is a smart idea for inventors to legally and financially protect themselves from possible lawsuits or financial troubles arising from the selling of their products. No one ever thinks that something they do will hurt anyone or that they will not pay back a loan taken from a bank or an investor. But the fact is, unexpected problems happen. There are always abnormal

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cases in which someone gets hurt using a product and they win millions of dollars for their injury. An old woman once burnt herself with a McDonald's coffee and she won millions of dollars because, "The coffee was too hot!" This same thing could happen to an inventor. If someone files a million dollar case against an inventor, he/she could go out of business. Not only would all the inventors business assets taken, but also any debts not paid would be taken from the inventor's personal assets, including houses, cars, land, and investments. It is easy to protect small businesses in the US. The states protect small business because it is such a strong force in our booming economy. There are several ways to register a business with the state and each comes with its own fees and protections. The least costly, small business approach is to register the business as a limited liability company (LLC). Am LLC is completely protected from losing personal assets while conducting business. For example, say someone sues for $1 million, but the inventor only has $200,000 in business assets. If the inventor is registered as an LLC, they can only lose the $200,000. All personal holdings are safe from any problems caused with the business. Another approach is to become incorporated in the inventor's state. This approach is much more expensive and the inventor would have to pay double the amount of taxes on his/her profits. The state levies a high tax on corporations because they are offered such high protection while doing business. To become an LLC or get incorporated, inventors should contact their local Secretary of State's office. By legally protecting personal assets, an inventor can worry about making the most out of business and not as much about things going wrong.

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Conclusion: The market is an open frontier, full of hopes and expectations for new business, products and services. It can be a dangerous place for someone who has never experienced the excitement and possible pit-falls of commerce. Thousands of inventors test their products on the market every year, only to find the journey too treacherous. To truly become Product-Smart, the inventor must test the market. Testing the market to understand customers, pricing, barriers to entry, and competitors gives the inventor a better shot at making their trip market a success.

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Existing system in the organization:The yarn produced will be free from any contamination. Sanghis hi-tech machines will produce a wide variety of top quality yarn, which meet international quality standards. They will be made available on cones of pre-determined standard length as per customer requirement with XERELA steam conditioning. Yarn count range: 1) Ne 20s-80s combed cotton yarns. 2) Ne 40s-72s Blended yarns with polyster 65% combed cotton 35%. 3) Ne 20s-40s Blended yarns with polyster65% combed cotton 35%. 4) Ne 30s 100% polyster. The yarn produced will be cotton, synthetic of blends as required. All the yarns will be highly suitable for the modern high-speed weaving/ Knitting machines or for sewing purpose. The yarn will be free from knates. The quality will match the highest international standards. Sanghi spinners have a turn over of 400 crores. It was started in the August 1996. The company exports its product to both quata and unquata countries. The quata countries are U.K., France and Sweden. The company imports machinery from Japan. Export Marketing Strategy. Sanghi spinners India ltd is a 100% EOU company is targeting 90% of its production to export to exports markets only. It is mainly concentrating on forex markets such as Hong Kong, Taiwan, Malaysia, Indonesia, Singapore, Thailand and Korea. Sanghi name has become a generic word for cotton yarn in Eastern Markets. Sanghi is using market penetration strategy by reduction of its cost. It is aiming to embark European market by 1999. It is mainly concentrating in giving qualitative product at right time and price. It is received 9002 certificate in 1997 for its quality products.

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Packing: The packing of yarn is done in 331 cotton in a container (40ft). Each cotton weights 45.36 Kgs and 24 cones per cotton. Each cone weights 1.89 Kgs. It is always a full container load. It is contains 15 tons per container. All the stuffing is done at the factory in the presence of central excise officer who is posted at the plant exclusively. Quality control: Quality inspection will be done by quality team of Sanghi at most sophisticated computerized Lab at Sanghi, Sanghi is also using the services of World class Third party inspection agency such as S.G.S, LLOYD Register, Each cap and export inspection agency of India. To insure a better quality product. Government Incentives: The company is availing the following types of incentives given the Government of India. 1) No custom duty on capital goods. 2) No excise duty on goods produced in 100% EOU. 3) Central sales tax reimbursement. 4) Corporate tax exempted 5) Income tax exemption up to 5 years. 6) Green channel facility 7) Posting of full time central excise at the factory. 8) Subsidies for traveling by executive of the company abroad for sales promotion. Documentation: Export documentation plays a vital role in international marketing. The term export documentation can be applied to all documents prepared in connection with exports from the stage of receiving the order to the time when the goods are on board the ship. These documents are issued by various organizations. Some of42

these documents go the goods across the international frontiers while others are retained at home for complying with certain requirements. The work relating the documents has grown both in size and volume in most of the countries in the world. The preparation of the documentation needed for export business is a difficult task involving considerable amount of time experience and skill. Any small mistake in important document can create problem all along the line and make the transaction of business difficult. It is necessary for a exporter to take care while preparing the documents.

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YEAR WISE EXPORTS AND DTA CLEARENCES S NO PERIOD PRODUCTION EXPORT CLEARENCES IN Kgs QUANTITY VALUE In Kgs Rs 2002-03 12766898.41 7547674.23 769430266.00 2003-04 2004-05 15524443.99 15067968.06 9467954.95 8965857.47 1112929039.0 0 968396387.00 DTA CLEARENCES QUANTITY In kgs 5142352.63 6092020.43 6099311.96 VALUE In Rs 416881697.00 527005137.00 559415806.00

1 2 3 TOTAL

43359310.46

25981486.65

2850755692.0 0

17333685.02

1503302640

Of the above the Export clearances to Europe and South East Asian Countries are given Below. EUROPIAN YEAR COUNTRIES VALUE IN Rs. 2002-03 187167809.0 2003-04 243836526.0 2004-05 494275132.0 SOUTH EAST ASIAN COUNTRIES VALUE Rs 814527330.0 717061870.0 623031235.0

Analysis of Geographical Conditions: For growing cotton best suitable climatic conditions it is found in the study that are only in few countries like India, Pakistan, china, South Africa, America and Egypt. For the growing of cotton black soil and good climatic conditions are required Humidity in atmosphere, so that the expected yield and out put is achieved there should more Agriculture. For our country big competitors in cotton

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market are China and Pakistan. Those countries are situated in Asian continent. More over these countries climatic conditions are nearer to us. From the above it can be concluded that the export clearances to Europe is increasing and there seems to be a bright future for tapping of export potential in these countries. From Rs.187167809 in 2002-03 it has gone up to Rs. 494275132 In 2004-05. This indicates that there is a tremendous growth potential for the same. Whereas in the south East Asian countries there is a decline in the growth of exports. From 814527330 in 2002-03 it has come down to Rs. 623031235. Analysis of Competition: For exporting to the European countries up to the end of December 2004 it was very critical. Because all European countries were following the quota system. Those Quotas were allotted based on the previous export market performance. To meet their requirement it was very tough for a country like India. Unless it is proven to the quality and international standards of yarn quality it is highly difficult to compete in European market. On One side they are rigid in quality consciousness and other side they are paying very good rate for the cotton yarns when compared to other continents. From 1 st January onwards all European countries liberalized quota system and now everybody has an opportunity to proove the quality in the competition in European markets. If we compare the foreign earnings when compared to other continents in Europe we have a margin of profit more than 30 to 35 percent. Our country is share in selling cotton yarn in Global market presently below is 1 percent. Particularly our present share is below 2% as per international statistical information Beauro. Hence there is a lot of scope for our country to capture yarn market in the European countries. Analysis of Current market situations: Presently our country is competing vary well in global marketing scenario. Due to liberalization of international trade and foreign equity more developed countries are showing much interest in investing country like India, because here the availability of raw material, cheaper labour and work force to meet required46

demand of the industry is found. Moreover natural resources are available according to the desired levels.

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FINDINGS1.There is a lot of export market potentiality in European countries than

compared to south East Asian countries. 2.Due to removal of Quota restrictions European countries, from January 2005 onwards there is accessibility in approaching European markets. 3. The present scenario in the textile field has entirely changed from synthetic yarns to cotton yarns. 4.Cotton yarns are free from all chemical reactions when compared to other synthetic and manmade yarns. 5.cotton yarns can be used in any type of climatic conditions irrespective of seasonal changes. 6.During winter cotton yarns give warm temperature, during summer it protects from heat. 7.When we export to European countries the foreign exchange realization will be more than 30 to 40 percent when compared to south East Asian countries. 8.Due to liberalization of trade either import or export are becoming easy for any importing or exporting country. 9.Present Euro value is strengthening than dollar value day by day in the forex business. So we will be having an advantage of forex reserves and increase our purchasing power. 10.At present Sanghi spinners are strenghting their market potentiality dayby-day and becoming big foreign exchange earners for the country 11.To maintain uniformity in the cotton yarn market Sanghi spinners are procuring huge quantities of raw-cotton at regular intervals.48

11.Either in European market or south East Asian market the success mantra is depending on quality conscious. 12.To get uniformity in raw cotton, procurement should be in huge quantity firm the agriculturists. 13.Foreign particles and wastage material are segregated during process of the cotton yarn. 14.Day to day awareness and marketing conditions should be informed from factory floor area to company higher authorities. 15.Good training facilities should be provided for newly joined workmen and employee. SUGGESTIONS 1.Keeping long business association either European countries or south East Asian countries the quality standards should not be compromise. 2. Sanghi spinners has to concentrate in selection of raw material. So that quality complaints are reduced. 3.Instead of producing more number of counts in cotton there should be to limited counts to strengthen the quality aspect. 4.In European markets not only quality consciousness but also packing and shipping are found being given equal importance. 5.Due to liberalization European market having very good scope for improvement of the existing of market and double the volume of exports in future. CONCLUSION There is a large scope and opportunity to capture the European and south East Asian markets for M/s Sanghi Spinners Limited and also our country. Our mind set and thinking should match according to their quality consciousness time bound delivery and standard packing even direct shipping lines are also playing important role in the export trade.

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BIBLIOGRAPHY:1. Company Website 2.Google web site 3.Export Market conditions 4. Market potential related books

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