COTTON SPINNING MILLS - AN INTRODUCTION

Food, clothing and shelter are the basic needs of human beings. The requirement of cloth to the
human beings is to protect themselves from light, wind and rain. The vision of the manufacture
of clothes was sophisticated. The cotton spinning and weaving and cloth manufacturing were
always emphasized in India. Indian historical evidence testifies this.

EVOLUTION OF COTTON INDUSTRY

The cotton textile industry is one of the well organized industries in our country both in terms of
value of annual output and number of labourers employed. India has the worlds highest land
acreage under cotton, but in terms of production among 55 major countries, it ranks fourth after
the U.S.A., Russia
and China. The cotton industry accounts for 20 per cent of total industrial output, provides
employment to 20 million people and contributes to 30 per cent to total value of exports. The
cotton textile products have become indispensable for all sections of people throughout the
world. The industry has been emerging as a highly organized one in almost all countries today. In
fact, many countries have made a significant progress in manufacture of cotton textile products.
In order to provide adequate clothing to the growing global population, several countries have
been going in a big was by taking more land under cotton crop cultivation and thereby to
increase the production and productivity in the cotton textile industry.

Cotton Textile Industry in India

Introduction: India is one of the important cotton-manufacturing countries of the world. Both
short-staple and long-staple cotton is grown in the country.
Cotton textile industry is one of the important and largest industries in India. It accounts for a
large portion of the total industrial output in the country each year.
This cotton textile industry is now in a position to meet the total demand for textiles in the home
market and to leave a sufficient surplus for foreign export. The industry also contributes towards
the total foreign income of our country and engages millions of people.

Production and Trade: India ranks among the largest producer and exporter of cotton yarn and cotton
textile products. India exports cotton textiles to the countries of Russia, U.K., Australia, Sri Lanka, Iran,
Germany, Belgium, Italy, etc.

Cotton Textile Export Promotion Council

The Cotton Textile Export Promotion Council (TEXPROCIL) takes part in national and
international events to enhance the visibility of Indian products, advertises and promotes Indian
products in various media vehicles such as fashion magazines, event-related pull-outs, India
reports and leading trade magazines, and organises buyer-seller meets (BSM) and trade
delegation visits.

History, Growth and Development:

The productions of cotton, hand spinning and weaving have been practiced in India from immemorial
times. However, the factory production of cotton goods dates from the middle of the 19 th century.
The cotton textile industry in Indian was initiated with the establishment of the first cotton textile factory
at Ghusuri near Kolkata in 1818. However, it was closed down very soon due to the shortage of raw
material. Actual development of the industry had been taking place since 1859 with the establishment of
cotton mill at Mumbai which is located in the cotton growing region of Western India. Since then there
has been rapid growth of the industry around Mumbai and Ahmedabad.
Industry has made rapid progress since 1880. The cotton mill industry made phenomenal progress during
the period of 40 or 45 years since 1880. In the beginning, yarns spinning developed a great deal. There
was an export trade in yarn with China. Now, however, both yarn and cloth are manufactured for homeconsumption.

Present Position:
At present, cotton textile industry is largest organised modem industry of India. There has been a
phenomenal growth of this industry during the last four decades. About 16 per cent of the industrial
capital and over 20 per cent of the industrial labour of the country is engaged in this industry. The total
employment in this industry is well over 15 million workers.
There are at present 1,719 textile mills in the country, out of which 188 mills are in public sector, 147 in
cooperative sector and 1,384 in private sector. About three-fourths were spinning mills and the remaining
one-fourth composite mills. Apart from the mill sector, there are several thousand small factories
comprising 5 to 10 looms.

Raw materials
The cotton textile industry requires raw cotton as principal raw material and chemicals like caustic soda,
dyes, arrowroot or starch, etc. for its production. The cotton growing regions are Maharashtra, Gujarat,
Karnataka, Tamil Nadu, etc.

Classification
There are three types of cotton mills:

Spinning mills,
Weaving mills and
Composite mills thread and cloth, both are produced.

Spinning mills: These mills convert cotton or manmade fiber into yarn to be used for weaving
and knitting.

Weaving mills: Weaving and knitting mills convert cotton or manmade fiber or blended
yarn into woven or knitted fabrics.

Composite mills: These mills are relatively large-scale mills that integrate spinning,
weaving and, sometimes, fabric finishing.

Investments:
The textiles sector has witnessed a spurt in investment during the last five years. The industry
(including dyed and printed) attracted Foreign Direct Investment (FDI) worth US$ 1.77 billion
during April 2000 to June 2016.
Some of the major investments in the Indian textiles industry are as follows:

Reliance Industries Ltd (RIL) plans to enter into a joint venture (JV) with China-based
Shandong Ruyi Science and Technology Group Co. The JV will leverage RIL's existing
textile business and distribution network in India and Ruyi's state-of-the-art technology
and its global reach.
Giving Indian sarees a green touch, Dupont has joined hands with RIL and Vipul Sarees
for use of its renewable fibre product Sorona to make an environment-friendly version
of this ethnic ladies wear.
Grasim Industries has invested Rs 100 crore (US$ 15 million) to develop its first fabric
brand, Liva', which it will distribute through 1,000 outlets as part of a plan to stay in sync
with changing consumer behaviour.
Snapdeal has partnered with India Post to jointly work on bringing thousands of weavers
and artisans from Varanasi through its website. This is an endeavour by Snapdeal and
India Post to empower local artisans, small and medium entrepreneurs to sustain their
livelihood by providing a platform to popularise their indigenous products, said Mr
Kunal Bahl, CEO and Co-Founder, Snapdeal.
Welspun India Ltd (WIL), part of the Welspun Group has unveiled its new spinning
facility at Anjar, Gujarat - the largest under one roof in India. The expansion project

reflects the ethos of the Government of Gujarats recent Farm-Factory-Fabric-FashionForeign Textile Policy, which is aimed at strengthening the entire textile value-chain.
American casual fashion retailer Aropostale, Inc. has inked a licensing agreement with
Arvind Lifestyle Brands Ltd to open standalone stores in the country. Aropostale will
open 30 stores and 25 shop-in-shop locations over the next three years.

Government Initiatives:
The Indian government has come up with a number of export promotion policies for the textiles
sector. It has also allowed 100 per cent FDI in the Indian textiles sector under the automatic
route.
Some of initiatives taken by the government to further promote the industry are as under:

The Government of India has started promotion of its India Handloom initiative on
social media like Facebook, Twitter and Instagram with a view to connect with
customers, especially youth, in order to promote high quality handloom products.
The Ministry of Textiles launched Technology Mission on Technical Textiles (TMTT)
with two mini-missions for a period of five years (from 2010-11 to 2011-12 in the 11th
five year plan and 2012-13 to 2014-15 in 12th five year plan) with a total fund outlay of
Rs 200 crore (US$ 30 million). The objective of TMTT is to promote technical textiles by
helping to develop world class testing facilities at eight Centres of Excellence across
India, promoting indigenous development of prototypes, providing support for domestic
and export market development and encouraging contract research.
The Government of India is expected to soon announce a new National Textiles Policy.
The new policy aims at creating 35 million new jobs by way of increased investments by
foreign companies, as per Textiles Secretary Mr S K Panda.
Subsidies on machinery and infrastructure
The Revised Restructured Technology Up gradation Fund Scheme (RRTUFS) covers
manufacturing of major machinery for technical textiles for 5 per cent interest
reimbursement and 10 per cent capital subsidy in addition to 5 per cent interest
reimbursement also provided to the specified technical textile machinery under RRTUFS.
Under the Scheme for Integrated Textile Parks (SITP), the Government of India provides
assistance for creation of infrastructure in the parks to the extent of 40 per cent with a
limit up to Rs 40 crore (US$ 6 million). Under this scheme the technical textile units can
also avail its benefits.
The major machinery for production of technical textiles receives a concessional customs
duty list of 5 per cent.

Specified technical textile products are covered under Focus Product Scheme. Under this
scheme, exports of these products are entitled for duty credit scrip equivalent to 2 per
cent of freight on board (FOB) value of exports
The Government of India has implemented several export promotion measures such as
Focus Market Scheme, Focus Product Scheme and Market Linked Focus Product Scheme
for increasing share of Indias textile exports.
Under the Market Access Initiative (MAI) Scheme, financial assistance is provided for
export promotion activities on focus countries and focus product countries.
Under the Market Development Assistance (MDA) Scheme, financial assistance is
provided for a range of export promotion activities implemented by Textiles Export
Promotion Councils.
The government has also proposed to extend 24/7 customs clearance facility at 13
airports and 14 sea ports resulting in faster clearance of import and export cargo.
The Ministry of Textiles has approved a 'Scheme for promoting usage of geotechnical
textiles in North East Region (NER)' in order to capitalise on the benefits of geotechnical
textiles. The scheme has been approved with a financial outlay of Rs 427 crore (US$ 64.1
million) for five years from 2014-15.
A Memorandum of Understanding (MoU) has been signed between India and Kyrgyzstan
seeking to strengthen bilateral cooperation in three fields -Textiles and Clothing, Silk and
Sericulture, Fashion

Road Ahead
The future for the Indian textile industry looks promising, buoyed by both strong domestic consumption
as well as export demand. With consumerism and disposable income on the rise, the retail sector has
experienced a rapid growth in the past decade with the entry of several international players like Marks &
Spencer, Guess and Next into the Indian market. The organised apparel segment is expected to grow at a
Compound Annual Growth Rate (CAGR) of more than 13 per cent over a 10-year period.

The key advantages of the Indian industry are :

India is the third largest producer of cotton with the largest area under cotton cultivation
in the world. It has an edge in low cost cotton sourcing compared to other countries.

Average wage rates in India are 50-60 per cent lower than that in developed countries,
thus enabling India to benefit from global outsourcing trends in labor intensive businesses
such as garments and home textiles.

Design and fashion capabilities are key strengths that will enable Indian players to
strengthen their relationships with global retailers and score over their Chinese

competitors. This is also visible in auto sector and many other industries like IT and
software and Pharma research.

Production facilities are available across the textile value chain, from spinning to
garments manufacturing. The industry is investing in technology and increasing its
capacities, which should prove a major asset in the years to come.

India has gathered experience in terms of working with global brands and this should
benefit Indian vendors.

Companies with integrated capacities, such as Arvind Mills and Vardhman Spinning, Paras
Cotspin Ltd.; capable of delivering large volumes are likely to gain.
Alternatively, market leaders in niche segments, such as Alok Industries, Abhishek Industries and
Welspun India (both in cotton pile towels), may also emerge as gainers.
Some of the largest garment exporters, such as Orient Craft and Gokuldas Exports, which supply
to international retailers, could gain considerably.

SWOT Analysis of Indian Textile Industry

Strengths
Strong cotton base
Strong entrepreneurial class
Flexibility in production of small order
lots
Presence of integrated concept to
consumer
Ability to handle value additions,
embellishments, etc.
Adequate labour supply at relatively
competitive wages
Good cultural comfort with US and
Europe
Growing domestic market
Opportunities
Quotas carried on in China after 2005
Good political equation with EU and
US

Weaknesses
Poor work practices resulting in higher
labour cost component in many staple
garments, in spite of low labour costs
Rigid government labour policy and
lack of rationalisation of duties in
MMF
High transaction and power cost
Too much emphasis on cotton,
synthetic fibre base not equally
developed
Technological obsolescence and lower
efficiencies
Lack of strong linkages between raw
material supplier and the apparel
manufacturer
Threats
Rupee appreciation in last few months
Trade blocs and partnerships at the
exclusion of India

Improvements in infrastructure and

regulations
Research and product development
Buyers preference for India, after
China
Understanding buyers need because of
language advantage

Location disadvantage: long transit

time to key markets
Pricing pressure, following opening up
of quotas
Enhanced competition from other
countries similarly constrained by
quotas

COMPANY PROFILE
PARAS COTSPIN LTD. (PCL) is a reputed enterprise actively engaged in the production of
textile yarn having strong position in the Indian Textile sector for the manufacturing of value
added Natural and Blended yarns, all types of spun yarns and Home Textile Furnishing. It is a
reputed manufacturer and exporter of cotton yarn. The Companys exports accounts for around
26 per cent of 2014-15 revenues compared to 25 per cent in 2013-14. On back of strong brand
image across globe, company had earned revenues from overseas sale of traded goods as well.
Within short span of time, its quality graph has risen by leaps and bounds.
Paras Cotspin Ltd. was incepted in the year 2007 and is situated at Samna Punjab (India). This is
open end unit manufacture 100% cotton yarn. Mr. Krishan Gopal Duggal CMD of the
company has been the key figure behind its consistent progress at the international level. State-of
art-infrastructure and efficient workforce has been its backbone.
It has also been conferred with Three Star Export House Certificate from Government of India.
Companys products are available at competitive prices and are benchmarked to the international
quality standards ISO 9001:2008 andUster quality certifications.

Capacity:
PCL is a one-stop-shop for all kinds of spun dyed yarn from natural or manmade fibers across
any blend any shade in the count range of 8 NE - 30NE. It is having the capacity to manufacture
single-ply, double-ply an average daily yarn production of over 14 tonnes having installed
capacity of 2816 ROTORS to produce 14 tonnes per day of yarn, cotton mlange and cotton
blended mlange , yarn from specialtyfibers like lycra twisted double core yarn etc., in single
ply and double ply.

Strategies for success:

The main strategies of the company are:

To meet its customers requirements consistently over the years by the consistent
investment in installing state-of-the-art technology machines. Over the decade, it has
invested about Rs.100 crore in expansion, modernization, acquisition and cutting-edge
technology. Nearly 56% of its ROTORS are less than a decade old.
To invest in deepening longstanding relationships with marquee customers like Page
Industries, Siyarams, Donear, Shivalik Prints, Digjam, Raymonds Grasim, etc. in India
and as well as with agents and dealers across India and abroad.
To make efforts for the development of multiple products across multiple grades.
To market its products at the early stage of its life cycle, helping in strengthening the
business of its downstream customers..
To ensure strict quality check so as to be able to deliver supreme quality goods to its
customers.
To increase its production capacity and quality of yarns, so that it can contribute in cotton
yarn industry up to a large extent.
To conduct various training programs at regular intervals, so that its employees can
update themselves with the latest trend of the industry.

Thus at PCL, resilience is derived from the ability to understand customer needs, create
differentiated products, invest in enduring relationships, reduce costs, and enhance quality.

Products:
Cotton Yarn is widely used in worlds textile industries
PARAS COTSPIN is pioneer in manufacturing open end cotton yarn ranging from counts NE8 to
NE30 prepared from finest cotton around the world. It assures that this yarn meets the customers
most demanding requirements.
The quality of the yarn produced is as per 5% user level standards and as a result, the product has
carved a 'niche' for itself and commands a premium in the market.

High Quality Weaving and Knitting Yarn.: Its yarn sold under the brand name PCL and its
count range 8NE to 30NE with csp range 1300 to 2100.
SlubYarn.: It also provides slub yarn of multicounts with very good quality. Slub yarn is also
known as fancy yarn and used to make garments as well as jeans, curtains, bedspreads etc.

Packing Detail: It provides carton, pallot and bag packing as per customer requirement. It can
deliver small and large lot sizes quickly as per customer requirement.

Global Network
It has nurtured a well spread distribution network that is expanding not only in India but also in
overseas markets. Our network has also enabled in timely and efficient product delivery.
It has a strong presence in the domestic and global market and have established ourselves
as reliable suppliers. PCLS has global footprint with market presence in over 10 countries
across Europe, North America, South-East Asia.
Few countries where it sells its products include:

NEPAL
EGYPT
TURKeY
CHINA
GERMAN

BANGLADESH
KOREA
PORTUGOL
SRILANKA
COLOMBIA

Departments

RSAEXIMH.FOUPGTLJCNDVY

Processing of cotton

Cotton Manufacturing Processes

Bale Breaker

Blowing Room

Willowing

Breaker Scutcher

Batting

Finishing Scutcher

Lapping

Carding

Carding Room

Sliver Lap

Combing

Drawing

Slubbing

Intermediate

Roving

Fine Roving

Mule Spinning

Winding

Ring Spinning

Spinning

Reeling

Doubling

Bundling

Bleaching

Weaving shed

Winding

Beaming

Cabling

Warping

Gassing

Sizing/Slashing/Dressing

Spooling

Weaving

Cloth

Yarn (Cheese)- - Bundle

Sewing Thread

Financial ratios
Introduction
A ratio analysis is a quantitative analysis of information contained in a companys financial
statements. Ratio analysis is based on line items in financial statements like the balance sheet,
income statement and cash flow statement; the ratios of one item or a combination of items - to
another item or combination are then calculated. Ratio analysis is used to evaluate various
aspects of a companys operating and financial performance such as its efficiency, liquidity,
profitability and solvency. The trend of these ratios over time is studied to check whether they
are improving or deteriorating. Ratios are also compared across different companies in the same
sector to see how they stack up, and to get an idea of comparative valuations. Ratio analysis is a
cornerstone of fundamental analysis.
While there are numerous financial ratios, most investors are familiar with a few key ratios,
particularly the ones that are relatively easy to calculate. Some of these ratios include the current
ratio, return on equity, the debt-equity ratio, the dividend payout ratio and the price/earnings
(P/E) ratio.
For a specific ratio, most companies have values that fall within a certain range. A company
whose ratio falls outside the range may be regarded as grossly undervalued or overvalued,
depending on the ratio.
Ratio analysis can provide an early warning of a potential improvement or deterioration in a
companys financial situation or performance. Analysts engage in extensive number-crunching of
the financial data in a companys quarterly financial reports for any such hints.

Activity / Turnover Ratios are a set of financial ratios used to measure the efficiency of various
operations of a business. Activity ratios measure the efficiency of the firm in using its resources /
assets. These ratios are also known as Asset Management Ratios because these ratios indicate the
efficiency with which the assets of the firm are managed / utilized.
Activity / Turnover Ratios essentially evaluate the operational efficiency of any business by
measuring the rate of utilization of various assets. These ratios are directly linked with the life
blood of a business i.e. Revenue. The efficiency is measured in terms of generation of revenue by
the respective assets. These ratios are also known as performance / efficiency ratios.

Assets such as machinery, raw materials, debtors etc are introduced to a firm to generate sales for
the firm and thereby generate profits. These turnover ratios indicate the speed at which these
assets are converted into sales. For example, inventory turnover ratio indicates the number of
times the inventory is converted into sales in a year.
The result of an activity / turnover ratio is an absolute number representing the efficiency of the
asset utilization. Higher the ratio better is the efficiency.
A. Types of Turnover Ratios
As we can make out, the turnover ratios are essentially a relationship between sales and the
assets of the firm. Based on the different types of assets, the activity / turnover ratio is classified
into following types.

1) Activity ratios
i.
Debtor / Receivable Turnover Ratio and Average Collection Period:
Receivable turnover ratio indicates the frequency of conversion from debtors to cash normally in
a year. It also suggests the extent of liquidity of debtors. Average collection period gives a time
period in which debtors are converted into cash. Both the ratios indicate the same thing but in
different terms. The former is expressed in no. of times whereas the latter in no. of days or
months. Formula for debtor / receivable turnover ratio and average collection period is as
follows:
Debtor turnover ratio = credit sales/average debtors
average collection period = 365 days / debtor turnover ratio

ii.

Stock / Inventory Turnover Ratio:

Inventory turnover ratio indicates how many times inventory is sold and replaced in a financial
year. In other words, the ratio gives the frequency of conversion of inventory into cash in a given
financial year. Normally, a higher ratio is considered good as it suggests better inventory
management.
Stock or inventory turnover ratio = cost of goods sold / average inventory

iii.

Assets Turnover Ratio:

Asset Turnover Ratio calculates the value of revenue achieved per dollar of investment. A higher
ratio indicates better asset management and utilization and vice versa. The ratio also depends on
the business to business based on their profit margins. With lower margins, this ratio is normally
high. The ratio is calculated as below:
Asset turnover ratio = net revenue / sales

iv.

Accounts payable ratio:

The accounts payable turnover ratio is a short-term measure used to quantify the rate at which a
company pays off its suppliers. Accounts payable turnover ratio is calculated by taking the total
purchases made from suppliers and dividing it by the average accounts payable amount during
the same period.
Accounts Payable Turnover ratio = total credit sales / average creditors

2) Liquidity ratios:
Liquidity represents one's ability to pay its current obligations or short-term debts within a period
less than one year. Liquidity ratios, therefore, measures a company's liquidity position. The ratios
are important from the viewpoint of its creditors as well as management. The liquidity position
of the company can be measured mainly by using two liquidity ratios such as follows.
a. Current Ratio
b. Quick Ratio

a. Current Ratio
Current ratio is also known as short-term solvency ratio or working capital ratio. Current ratio is
used to assess the short-term financial position of the business. In other words, it is an indicator
of the firm's ability to meet its short-term obligations.
Current ratio is calculated by using following formula:
Current ratio = Current assets/Current liabilities

Current assets are cash and those cash equivalent of a business which can be converted into cash
within a short period of time not exceeding a year. Cash in hand, cash at bank, bills receivables,
sundry debtors, accrued incomes, prepaid expenses, inventory, short term loans provided ,
advance given etc are the examples of current assets.

Current liabilities are those obligations of a business, which are to be paid within in a short
period of time not exceeding a year. Bills payable ,sundry creditors, short term loan taken,
income tax payable, dividend payable, advance incomes, accrued expenses are the examples of
current liabilities.

b. Quick Ratio
Quick ratio is another measure of a company's liquidity. Quick ratio is also known as liquid ratio
or acid test ratio. However, although it is used to test the short-term solvency or liquidity position
of the firm, it is a more stringent measure of liquidity than the current ratio. This ratio is
calculated by dividing liquid assets by current liabilities. Liquid assets are cash and other assets
which are either equivalent to cash or convertible into cash within a very short period of time.
The following formula is used to calculate quick ratio:
Quick Ratio = Liquid assets/Current Liabilities

Liquid assets = Total current assets - stock- prepaid expenses