ARIF Main Body

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CHAPTER: 1

INTRODUCTION

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1.0 Introduction

Minimizing the sum of quality costs related to limited resources forms one of the

main determinants in a companys success. In production systems, resources such aslabors inspecting items produced, labors training personnel to prevent items from

erroneous results, labors reworking on erroneous items , labors dealing with

complaints about erroneous products etc. are limited. Hence, it is important to find out

the most suitable mix of conformance and nonconformance costs of products in

allocation of the scarce resources. In literature, the cost of poor quality as a result of

imperfections of a vendors incoming input materials and the errors of the

manufacturing process. An optimization model including appointment of the cost of

quality between the two parties as buyers and suppliers models optimizing total

quality costs including each quality cost components has not been studied extensively.

In this study, a generalized optimization model for a multistage production system

based on quality costs as conformance and nonconformance costs has been developed.

1.1 Objective of the Study

1.1.1 Broad Objectives:

The general objective of this study is to determine the present activities of garments

manufacturing and the significance of their role for smooth, efficient and effective

marketing process of garment products overseas.

1.1.2 Specific Objectives:

However the specific objectives of the study may be described as:

To identify the challenges of Garment Products in the Global Market.

To sketch the overall condition of the Bangladeshi garments product in the global

market.

Investigate the obstacles to the efficiency and effectiveness of smooth cost and

production of garment products.

To give some recommendation how the garment products can face the challenges

and overcome the obstacles.

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1.2 Scope of the Study

The study will give a clear idea about the cost and p production system

The study will also help us to understand the role of Buying Houses in the

socioeconomic development of the country.

It will flourish obstacles to the existing roles of buying houses in exporting the

garment products.

Finally, ways to overcome the obstacles to their existing roles.

1.3 Limitations

The time was one of the major constraints. As our internship program is 4 months

long, it was difficult to cover and collect all the necessary materials for completion of

such a large report within this time boundary.

I also would like to mention that the people of Ratul Knitwear & Fabrics Ltd are

under tremendous workload. Although, they wanted to co-operate me in writing my

report, their busy schedules sometimes did not allow them to do so. On the other

hand, due to secrecy of official information, sometimes they showed unwillingness to

provide me information.

1.4 Methodology

In order to conduct such a study the reports prepare must follow some specific

methods. This report is based on the Primary and Secondary data.

1.4.1 Organization Covered:

This study mainly covers not a particular organization. The relevant data are collected

from the head office of the Ratul Knitwear & Fabrics Ltd and sister concerns.

1.4.2 Analysis Technique & Report Writing (Research Design)

At first, we went to Ratul Knitwear & Fabrics LTD. industry and collect information

from the personnel. In preparing this report, we approached according to the

following procedure:

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1.5 Aspects of the analysis:

In the context of Bangladesh, the development of RMG sector can be considered as a

vital instrument to ensure the rapid industrialization. In this paper i have tried to

identify the costing procedure of Ratul Knitewawe ltd . So in this report I will

consider to find out the several aspects.

Available structural or Environmental factor which leads to the production.

What are the available meterials and elments that are use to production .

The cost allocation system of every step of production .

By this analysis I would like to find some recommendation and suggestions to

overcome these obstacles.

1.6 Criteria of analysis:

In this study I tried to findout the several factor of production which leads to incrising

or decresing the production cost .This is basically a primarey and secondary data

based report . Most of the data has been collected from primarey sources. So the

report has been based organizational data which is available in any form such as

financial statement of Ratul kniteware limited, books, journals, magazines,

newspapers etc.

To continue this process I would like to accumulate some information as follows:

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Select the topic

Access potential alternatives

Sorting information

Analysis and evaluation of theinformation

Report writing and presenting


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I picked data from the five Ratul kniteware limited.

I tried to point out the production factor basically the direct meterials

and its cost .

Based on primarey data I try to explore the extend of the production.

1.7 Variables

1.7. 1 Dependent Variable: Variables which is dependent on others that mean the

change of an independent variable can leads to change the result of the dependent

Variables. Here the dependent variable is Cost of the kniwteware Sector of

Bangladesh which is depends upon the several independent facto.

1.7.2 Independent variables : Variables which has effect on the result of the

dependent variables that mean due to change of independent variables the dependent

variable ultimately get a change .Here Independent Variables are as follows:

Fabrics Price

Neck Rib Price

Accessories Test Charge

Accessories Item

Sweing Accessories

Main Label

Size Lable

Care Lable

Sweing Thread

Additional Label

Finishing Accessories

Hang Tag

Price Tag

Tag Pin

Gum Tape

Scotch Tape

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Carton

Poly

Documentation Charge

Print/Embroidery

Allover Print (Rotary Print)

Stone (Motive)

Zipper

Snap Button/Normal Button/Special Button

Drosting/Twell Tape/Herring bone tape

Elastic

1.8 Source of data:

All the relevant data regarding this study are collected from two sources. These

Are:

Primary data: It includes the following sources of data. In-depth ask the

question of the employee.

Secondary data: I need much information for the report, which we get from

secondary data. These are:

Ratul Knitwear & Fabrics Ltd.

Ratul Knitwear & Fabrics Ltd sister concern.

Different types of document of Ratul Knitwear & Fabrics Ltd.

World Wide Web

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Chapter 2World Wide Garments

Sector

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Worldwide Garments sector

2.1 Garments Industry in India:

The garments industry in India is one of the best in the world. An extremely well

organized sector, garment manufacturers, exporters, suppliers, stockists and

wholesalers are the gateway to an extremely enterprising clothing and apparel

industry in India. There are numerous garments exporters, garments manufacturers,

readymade garments exporters etc. both in the small scale as well as large scale.

During April-December 1999-2000, textile exports were recorded as US $ 9735.2

million (Rs.440179.4 million), of which ready made garments comprised nearly 40%.

Interestingly, almost of India's total exports goes to the USA.

Indian readymade garments and textiles are extremely popular the world over. In fact,

exports of readymade garments registered a 6.4% increase in dollar terms and an

11.6% increase in rupee terms during the period April-December 1999-2000, despite

a sluggish growth in income both at home and abroad. Indian Garment export growth

during April-June 1998 for woolen ready made garments was a phenomenal 150%,

for ready made garments made of silk it was 58%, and for other ready made garments

it was 39%, in dollar terms.

Today, garments exports from India have made inroads into the international market

for their durability, quality and beauty. One of the reasons for the economical pricing

of India's ready made garments and apparels is the availability of highly skilled, cheap

labor in the country.

2.2 Garments industry in China:

The financial crisis in the second half of 2008, made some major developed countries

in Europe and the United States economy went into the worst recession, which has

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brought a heavy blow to many developing countries and regions export-oriented

economy. As the financial crisis spread to the real economy, the international demand

declined significantly. As the largest textile-producing countries in the world, China's

textile industry has also suffered a dramatic impact. China's textile industry had a

marked increase tended to decline for the first time after consecutive years of steady

and rapid growth. In 2009, the impact of international financial crisis was still

lingering, the international market remained in the doldrums, and the textile industry

is still facing with the non-optimistic external situation. In the harsh international and

domestic environment, in order to cope with financial crisis and achieve sustainable

growth of China's textile industry, study the impact that the international financial

crisis on trend of China's textile industry then put forward some guidance. But its still

relatively small to study in perspective of combine the status of the Chinese textile

industry and their problems, as well as the financial crisis triggered a chain reaction.

Only in-depth study of the financial crisis and Chinese textile industry Chinas export

trade has important theoretical and practical significance. Most of the domestic and

foreign scholars are concentrating on the perspective of the impact that financial crisis

on export trade, to study the situation of China's textile industry and made a number

of coping strategies, or comparing the domestic and foreign policies and economic

environment trajectory to the study of the development its own problems, we can be

more targeted to guide China's textile industry to deal with the crisis, otherwise, just

remain at the surface of a general study is no practical guiding significance. This

paper based on reviewed the literature and relevant literature at home and abroad,

through in-depth analysis of the status quo and existing major problems, as well as the

financial crisis on the real impact of China's textile industry, ompared some of the

data in recent years, made corresponding countermeasures for the characteristics of

the textile industry of our country.

2.3 The Garments industry in Sri Lanka:

The garment industry in Sri Lanka expanded rapidly after the liberalization of the

economy in 1977. During the 1990s, the garment industry grew at 18.5 per cent per

annum. The export-led expansion of the industry led to the replacement of tea by

garments as the nations largest foreign exchange earner. Moreover, the industry has

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been contributing to the livelihood of nearly 1.2 million people. However, the boom

period for the industry is gradually coming to an end, with the quota system having

ended on 1 January 2005, regional trading blocs and bilateral free trade agreements

proliferating and governing nearly 33 per cent of global trade, and China emerging as

a major supplier of garments at very competitive rates. The Sri Lankan garment

industry is now gearing itself to face these challenges. This paper provides a broad

overview of the industry and analyses how the industry is preparing itself to meet the

global challenges. Section 2 provides a brief overview of the garment industry in Sri

Lanka. Section 3 gives a broad picture of the competitiveness of the Sri Lankan

garment industry.

These statistics clearly indicate that Sri Lanka is highly dependent on the

industry for both employment and foreign exchange earnings. Foreign direct

investment (FDI) has been very significant in the sector, accounting for 10.4 per cent

of total cumulative FDI in 2003. According to the available data from BOI, foreign

investors own close to 50 per cent of total garment factories and account for nearly 50

per cent of total textile and garment exports (USITC, 2004).2 Greater dependence on

imported textile materials indicates that Sri Lanka has a large export-oriented garment

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sector, but a small textile industry that has no capacity to supply the quantity or

quality of yarn and fabrics required by the garment industry.

In the early 1990s, a concerted effort was made to promote backward linkages

in the garment industry. Government-appointed delegations were sent overseas to

attract large textile producers to Sri Lanka. A number of textile producers that had

come up during the pre-1977 import-substitution regime and had found it difficult tosurvive in the liberalized economy were privatized in the early 1990s. Despite all such

efforts, the development of backward linkages from the garment industry to the

textiles sector was very slow for a number of reasons (Kelegama and Foley, 1999). In

1997, the textile industry faced a major setback. The East Asian crisis had triggered a

currency depreciation in Indonesia and the Philippines two of Sri Lankas

competitors in garment exports.

Today, the Sri Lankan garment industry remains a low value-added industry, though

some backward linkages had developed by the mid-1990s. There were 891 garment

factories in operation in 1999 out of which 18 per cent was categorized as large, 50

per cent medium and 32 per cent small (TVEC, 1999). In 1999, 72 per cent of the

businesses were geographically located in the Western Province. Just 12 per cent of

the factories control around 72 per cent of the exports (CBSL, 2002:103). Some of the

top producers have developed strong and reliable links with well-known international

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retailers indirectly by buying intermediaries. Sri Lankan garments that were highly

quota-dependent initially have now become less dependent on quotas, with 47 per

cent of exports coming under the non-quota system in 2002.4 Most Sri Lankan

garment exports are destined for the United States (63 per cent) and European Union

(30 per cent); hence, there is not much market diversification. The key varieties of

garments that Sri Lanka exports are: HS 6204 (womens or girls suits, and similar

items under this category), HS 6203 (mens or boys suits, and similar items under

this category), and HS 6206 (womens or girls blouses, and similar items under this

category). Sri Lanka is well known as a top exporter of womens lingerie. Sri Lankas

garment industry has a fairly reputable status in the international market. Sri Lankan

garment exports to the United States market coped well with the emergence of

NAFTA in 1994 despite many pessimistic views expressed at that time.5 Sri Lankan

garment industrialists have opened factories in Bangladesh, Maldives, Jordan, Kenya

and Mauritius, among others, and are performing well. The large and well-established

garment producers have featured in published works (Friedman, 2000). The Sri

Lankan garment industry has gone through turbulent times; for instance, during the

1988-1989 civil conflict; in 1993, when countervailing duties and embargo were

imposed by the United States; and in 2001, when war-risk premiums and surcharges

were imposed after the bomb attack on Colombo International Airport. The industry

currently employs around 330,000 people and sustains the livelihood of around 1.2

million others.

The competitive strength of the Sri Lankan garment industry is based on cheap labour,

a literate labour force, high labour standards, investment-friendly government policies

and strategic shipping lanes. On the other hand, there are also competitive

disadvantages, such as long lead times, weak marketing, lack of product development

and low labour productivity partly due to outdated technology. In 1983, Sri Lanka

experienced civil conflict and many foreign investors, including foreign garment

industrialists, shied away from the country. Some moved to Bangladesh; others

moved to newly emerging low labour-cost East Asian countries, such as Cambodia

and Viet Nam. Labour costs were comparatively low in these countries and, by the

mid-1990s, Sri Lanka could no longer compete on the basis of low-cost labour and

measures had to be taken to improve the productivity of the sector. Low productivity

has offset to some extent the low labour-cost advantage of Sri Lanka. A study on the

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productivity of the garment sector shows that there are a number of issues pertaining

to low labour productivity in the garment industry and that there is substantial room

for improvement (Kelegama and Epaarachchi, 2002). One area that requires

upgrading is the development of human skills to deal with the technological changes

taking place in the garment industry. To meet the growing demand for semiskilled

workers in the industry, two training institutions, viz, the Textile Training Centre and

Service Centre and the Clothing Industry Training Institute came into operation, both

in 1984. In addition, a private sector training institute, the Phoenix Clothing Training

Institute, was established in 1998. A number of design schools have emerged, with the

Department of Textile & Clothing Technology in the University of Moratuwa

becoming the apex body for design. Design courses have been introduced, with the

collaboration of the London School of Fashion Design, to keep pace with the latest

fashion developments in the world and to train workers to match the demand. The

Asian Development Bank (ADB) has given a grant to set up a major fashion school at

the University of Moratuwa that is expected to be in operation by 2005. Sri Lankas

lack of competitiveness in garment products is not solely determined by low labour

productivity, firm level inadequacies and high turn-around time but also by

government policies. The cost of production in Sri Lanka has escalated in recent times

owing to the high cost of public utilities, such as electricity, water and

telecommunications (IPS, 2003). In fact, Sri Lankas electricity charges remain the

highest in Asia as a result of poor government policies contributing to

mismanagement in the electric power sector. If Sri Lanka is to gear itself to the post-

2004 challenges, a number of restructuring measures have to be taken in the garment

industry. Some measures have already been taken. Until recently, the Sri Lankan

garment industry did not have a strategy or plan for its future expansion. In 2002, the

industry came up with a five-year strategy report. This report contains a

comprehensive analysis of strengths, weaknesses, opportunities, and threats

(SWOT) and recommends a strategy for eliminating weakness, consolidating

strengths, making use of opportunities and minimizing threats. The report argues for

the establishment of a special research cell for the industry to keep track of

international trends in garment trading, and this cell came into operation in late 2002.

Having realized the need to speak with one voice in order to achieve a common goal,

garment industrialists and stakeholders set up the Joint Apparel Association Forum

(JAAF), a consortium of five different associations, in 2002.

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2.3 Trends in Production

Yarn and fabric production has been growing annually at 1.9% and 2.7% respectively,

since 2000. Yarn production has increased from 3,940 mn kg in 1999 00 to 4,326 mn

kg in 200405. Manmade yarn has driven much of this, showing a robust growth of

4.3% in the last five years. Spun yarn production and the cotton yarn sector have also

grown, albeit less impressively, recording growths of 2.4% and 0.6% respectively.

Fabric production has been growing at 2.7% annually between 2000 and 2005, driven

primarily by the smallscale, independent powerloom sector. Growth in the 100%

noncotton segment touched 5%, followed by cotton fabric at 1.5% and blended fabricat 0.3%. Fabric production touched a peak 45,378 million sq mtrs in 200405, and in

Nov 06, production recorded a robust 9% growth compared to the corresponding

period in the previous year.

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Segment wise Exports, 2002-2006 (US$ bn)

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Though significant investments egment, the are are in the spinning and weaving US$

6.67 segments is expected by 2008. Of this, more in the than segments, while only

25% is expected inunits.

2.4 Slowdown in economic growth and market demand

As the financial crisis deteriorates, many countries, such as the United States, Japan,

the European Union, have always been in economic recession, which impair

international market demand. China's textile enterprises have to adjust the rate of

production in order to relieve the operational pressure and survive in changes in the

market by cutting production and reducing inventory. Such actions decelerate textiles

production and exports totally, and shrink the ratio of investment growth. According

to the data of China's Textile Industry Association, in 2008, the gross industrial output

value of China's textile enterprises amounted to 3.478061 trillion, increasing

13.73% compared with the same period of the previous year, but falling 8.84% in

acceleration. And in the first eleven months of 2008, total profit of textile enterprises

reach to 104.225 billion, but falling 1.77% compared with the same period of the

previous year, and falling 38.76% in acceleration; profit margin is just 3.45%, lower

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than the same period last year by nearly 14%. And in whole year of 2009, exports of

China's textile industry is 1713.32 million U.S. dollars, lower 9.65% than the earlier

year; and imports is 16.924 billion U.S. dollars, lower 9.24% .

2.5 The corresponding strategy of China's textile industry

Facts have proved that if the textile industry exporting production to world markets

just rely on low cost, they will be very vulnerable to international economic situation

and trade policies, and more easily to be fined because of prosecutions against low-

cost strategy, which is not conducive to the entire textile exports. In order to enhance

product quality and the competitiveness of products, the textile industry should focus

on technological innovation, and constantly increase the scientific and technological

input to establish the overall product development system, in particular, to strengthen

high-tech, functional, differential fiber research and development and form of its own

technology brand. Under pressure of the current situation of trade and environmental

issues, the textile industry should be accelerated industrial transformation and

upgrading, exploit of new technology in textile processing, develop green and

environmentally friendly textiles actively, strive to obtain export "green pass" and go

green sustainable

development road. Meanwhile, the Chinese textile industry should dominate the

market by information technology, adhere to combine internal and external

information, analysis and establish of a sound global procurement and supply

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information systems and industry information network to adapt to the trend of world

consumption and textile trends, and thus win the market.

The implementation of scientific management methods and export market

diversification strategy

For a long time, China's textile mainly exports to three markets, the United States,

European Union, Japan, which reflects China's textile trade has a strong dependence

and instability. The concentration in some countries markets has led to the conflict on

China's textile products to protect their own markets and respond to the problem of

unemployment, and now under the influence of the financial crisis, China's textile

exports encounter more difficulties. Therefore, our textile industry should efficiently

implement the management methods and export diversification of the textile

production. Enterprises should select and plan to develop the potential markets,

reduce risks of market concentration, promote China's textile trade for sustainable,

stable and coordinate development. On the other hand, implement of the "going out"

strategy. At present, some countries and regions in Southeast Asia and Latin America

already have a textile industry base and lower-price labor, as well as favorable foreign

capital policy, domestic enterprises can consider to build factories there, avoiding the

fierce domestic competition and the regional restrictions on the importing country, or

acquisition of the importing country textile producers, thereby linking the research

and development, design, brands, retail outlets and other sectors in order to

circumvent trade barriers.

Strengthen macro guidance and support efforts to establish early warning

mechanism of trade friction

Textile industry is still an important Chinese traditional manufacturing industry and

has main effect on employment. So Government should support this labor-intensive

development of the industry on national policy in order to maintain the current

production and operation stability of textile enterprises. Meanwhile, to enhance the

international competitiveness of the industry, the Government should pay close

attention to formulate relevant policies and measures for technological introduction

standard of raw materials, semi-finished products, thereby consolidate the overall

textile industry technical capability. Facing national trade protection measures, the

relevant departments should establish a sound early warning mechanism for textile

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exports. Besides, they collecting, collating and publishing timely information on

international textile trade friction, which provides enterprises with comprehensive,

objective and timely information service to guide enterprises to promptly adjust the

investment and business activities. Once trade disputes generated, we should

strengthen the coordination and cooperation among the government, industry

associations and enterprises. Using international trade rules, we formulate

countermeasures and response positively. And, through a variety of channels and joint

efforts, we can resolve problems in order to maintain a fair trading environment.

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CHAPTER 3

An Overview of

Bangladesh RMGIndustry

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3.0 Factories Of Ready Made Garments:

Factories of ready-made garments have developed with the growth of garment export

of our country through buying house and direct marketing. It is the combination of allmarketing activities relating to searching foreign garment buyers and local buying

house for the order of garments products, taking order of readymade garment products

from them, execute order to local factories and providing overall support to the

both prospective buyers and trims suppliers.

It has not been a long time since Garments have started sprouting up here and there.

Only a few years back where it was difficult to find a reliable and quality Buying

House, but now, there are so many of those.

Garments industry is the highest industrial sector in Bangladesh. In one hand foreign

Buyers and buying house of garment products are largely dependent on this industry

for buying RMG, who are capable to produce and supply buyers demanded products.

In other hand trims producers are also dependent on this industry for their products

that places the order of certain garment item such as sweater that the producer

produces. So the relationship between garment industry and buying house industry are

interdependent. The existence of one without other is hardly possible. The reason for

this again exporting garment product involves so many stages from marketing to

distribution, which is not possible by any single group to do alone. For the

convenience of both buyers and suppliers, the buying house industry today has

developed enormously with a vision to perform marketing and distribution task of

garment industry.

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3.1 Overview of Bangladesh RMG

The ready-made garment (RMG) industry of Bangladesh started in the late1970s and

became a prominent player in the economy within a short period of time. The industry

has contributed to export earnings, foreign exchange earnings, employment creation,poverty alleviation and the empowerment of women. The export-quota system and the

availability of cheap labor are the two main reasons behind the success of the

industry. In the 1980s, the RMG industry of Bangladesh was concentrated mainly in

manufacturing and exporting woven products. Since the early 1990s, the knit section

of the industry has started to expand. Shirts, T-shirts, trousers, sweaters and jackets

are the main products manufactured and exported by the industry.

Bangladesh exports its RMG products mainly to the United States of America and the

European Union. These two destinations account for more than a 90 percent share of

the countrys total earnings from garment exports. The country has achieved some

product diversification in both the United States and the European Union. Recently,

the country has achieved some level of product upgrading in the European Union, but

not to a significant extent in the United States. Bangladesh is less competitive

compared with China or Bangladesh in the United States and it is somewhat

competitive in the European Union. The phase-out of the export-quota system from

the beginning of 2005 has raised the competitiveness issue of the Bangladesh RMG

industry as a top priority topic. The most important task for the industry is to reduce

the lead time of garment manufacturing. The improvement of deep-level

competitiveness through a reduction in total production and distribution time will

improve surface-level competitiveness by reducing lead time. Such a strategy is

important for long-term stable development of the industry, but its implementation

will take time. In contrast, the establishment of a central or common bonded

warehouse will improve surface-level competitiveness by reducing lead time, but

deep-level competitiveness will not be improved and long-term industry development

will be delayed. Therefore, granting permission to establish in the private sector such

warehouses with special incentives, such as the duty-free import of raw materials

usable in the export-oriented garment industry for reducing the lead time in garment

manufacturing is a critical issue for Bangladesh.

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Second, Bangladesh needs to improve the factory working environment and various

social issues related to the RMG industry. International buyers are very particular

about compliance with codes of conduct. Third, issues related to product and market

diversification as well as upgrading products needs to be addressed with special care.

Moreover, the Government of Bangladesh needs to strengthen its support. The

development of the port and other physical infrastructure, the smooth supply of

utilities, a corruption-free business environment and political stability are some

priority concerns for the Government to consider in its efforts to attract international

buyers and investors.

The RMG industry of Bangladesh has expanded dramatically over the last three

decades. Traditionally, the jute industry dominated the industrial sector of the country

until the 1970s. Since the early 1980s, the RMG industry has emerged as an important

player in the economy of the country and has gradually replaced the jute industry. The

export-quotasystem1 in trading garment products played a significant role in the

success of the industry. However, that quota system came to an end in 2004.

Therefore, the competitiveness issue needs to be addressed, with special attention

given to the long-term sustainability of the industry. The term competitiveness itself

is a broad concept. Its meaning, implications, adaptation and achievement vary from

firm to firm, industry to industry, or country to country. Michael E. Porter is a pioneer

of the competitiveness theory (Porter, 1990)at the national or macro level (Cho and

Moon, 2000). Firm/industry-level (micro level) competitiveness depends on various

parameters. However, the literature provides no universal agreement on the definition

of competitiveness. For example, some researchers consider the labor cost, unit cost,

exchange rate, interest rate, prices of material inputs another price- or cost-related

quantitative factor for measuring the competitiveness of manufacturing firm/industry.

Some other researchers consider product quality, innovativeness, design, distribution

networks, after-sales service, transaction costs, institutional factors relating to the

bureaucracy of export procedures and other non-price factors for measuring the

competitiveness of a manufacturing firm/industry The influences of both price and

non-price factors on the competitiveness of a firm/industry are reflected by market

share and profit. This study attempts to incorporate price, non-price and result (for

example, market share) factors in order to address the international competitiveness of

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the Bangladesh RMG industry. The majority of the competitiveness-related research

studies focus on the competitive performance or on the factors influencing

competitive performance. The studies consider product price, market share and other

indicators to measure competitive performance, while considering wages, costs,

productivity and other issues as factors influencing competitive performance.

However, the capability of 2 factor that influences the competitive performance of a

firm. According to him, improvement in the capability of a firm enhances its

competitive performance. This improvement takes time, but it ensures the long-term

sustainability of a firm. In contrast, improving only competitive performance and

not capability may not be sufficient to ensure the long-term development of the

firm. This study addresses the competitiveness issue from two broader dimensions:

surface-level and deep-level competitiveness.3 Surface-level competitiveness reflects

the competitive performance of a firm or industry that is directly observable to

consumers. Deep-level competitiveness reflects the capability of a firm or industry

that is not directly observable to consumers. An improvement in the deep-level

performance enhances the performance at the surface level. The severe competition

under the quota-free trading environment pressures the RMG industry of Bangladesh

to enhance its surface-level competitiveness at the earliest convenient time. However,

the long-term sustainability of the industry demands enhancement of deep-level

competitiveness. Therefore, the future development of the industry will depend on

how much importance will be given to which factors/dimensions, and how the

individual firms will respond and how government policies will influence the

industry. Hence, the discussion of the competitiveness of the Bangladesh RMG

industry requires simultaneous consideration of both the surface and deep dimensions.

In particular, this study uses (a) export value, product price, market share and lead

time as surface-level indicators, and (b) linkage expansion, factory environment,

product/market composition, and production and distribution time as deep-level

indicators for measuring the international competitiveness of the Bangladesh RMG

Industry. Provides an overview of the Bangladesh RMG industry. Section 3 discusses

the surface level competitiveness of the Bangladesh RMG industry. Section 4 focuses

on the deep-level competitiveness of the industry. Section 5 deals with the indirect

influences of governmental policies on the competitiveness of the Bangladesh RMG

industry.

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The RMG industry is the only multi-billion-dollar manufacturing and export industry

in Bangladesh. Whereas the industry contributed only 0.001 per cent to the countrys

total export earnings in 1976, its share increased to about 75 per cent of those earnings

in 2005. Bangladesh exported garments worth the equivalent of $6.9 billion in2005,

which was about 2.5 per cent of the global total value ($276 billion) of garment

exports. The countrys RMG industry grew by more than 15 per cent per annum on

average during the last 15 years. The foreign exchange earnings and employment

generation of the RMG sector have been increasing at double-digit rates from year to

year.

Important issues related to the Bangladesh ready-made Garmentindustry.

Year(s) Issue

1977-1980 Early period of growth

1982-1985 Boom days

1985 Imposition of quota restrictions

1990s Knitwear sector developed significantly1993-1995 Child labour issue and its solution

2003 Withdrawal of Canadian quotarestriction

2005 Phase-out of export-quota system

Currently, there are more than 4,000 RMG firms in Bangladesh. More than 95 percent

of those firms are locally owned with the exception of a few foreign firms located in

export processing zones (Gonzales, 2002). The RMG firms are located mainly in three

The RMG firms are located mainly in three main cities: the capital city Dhaka, the

port city Chittagong and the industrial city Narayangonj.

Bangladesh RMG firms vary in size Based on Bangladesh garment Manufacturers and

Exporters Association (BGMEA) found that in1997 more than 75 per cent of the

firms employed a maximum of 400 employees each. Garment companies in

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Bangladesh form formal or informal groups. The grouping helps to share

manufacturing activities, to diversify risks; horizontal as well as vertical coordination

can be easily found in such group activities. Ready-made garments manufactured in

Bangladesh are divided mainly into two broad categories: woven and knit products.

Shirts, T-shirts and trousers are the main woven products and undergarments, socks,

stockings, T-shirts, sweaters and other casual and soft garments are the main knit

products. Woven garment products still dominate the garment export earnings of the

country. The share of knit garment products has been increasing since the early 1990s;

such products currently account for more than 40 percent of the countrys total RMG

export earnings (BGMEA website). Although various types garments are

manufactured in the country, only a few categories, such as shirts, T-shirts, trousers,

jackets and sweaters, constitute the major production-share (BGMEA website)

Economies of scale for large-scale production and export-quota holdings in the

corresponding categories are the principal reasons for such a narrow product

concentration.

3.2 Export competitiveness in the United States market

Bangladesh has experienced some product diversification in its export of garments to

the United States market in recent years compared with the early 1990s.6 However;

the countrys performance in upgrading its products is not significant with regard to

the United States market .The country experienced a sharp increase in the export of

garment products to the United States market in the 1990s, but faced declines in

export earnings from that country in 2002 and 2003, followed by slow increases since

2004. The exports of Bangladesh also increased rapidly in the 1990s, although that

country experienced comparatively slow progress in the last few years. However, the

RMG exports of China to the United States have increased at a startling rate over the

years. For example, the textile and garment export earnings of China, Bangladesh and

Bangladesh from the United States were $3.6 billion, $0.8 billion and $0.4 billion

respectively in 1990, and increased to $22.4 billion, $4.6 billion and $2.5 billion

respectively in 2005. Such rapid expansion in the exports of China represents a major

challenge to other exporters. Bangladesh exported a total of 99 types of products in

the textile and garment category to the United States in 2005, but most of the

categorys contribution was minimal. For Bangladesh and China, the number of

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textile and garment product categories exported in the same year to the United States

was 161 and 167 respectively.

3.3 Export competitiveness in the European Union market

Bangladesh has experienced both quantitative and qualitative changes in exporting

garment products to the European Union market during the period 1996-2005. The

textile and garment export earnings of Bangladesh from the European Union

increased from 1.2 billion Euros in 1996 to 3.7 billion Euros in 2005. For Bangladesh

and China, the corresponding earnings increased from 3 billion and 5.3 billion euro in

1996 to 5.3 billion and 21.1 billion euros in 2005 respectively. Garment products

generate the major share of Bangladeshs export earnings from the European Union.

However, both textile and garment products in China and Bangladesh contribute to

the export earnings from the European Union. For example, garment products on

average generated more than a 95 per cent share of the total textile and garment

exports to the European Union from Bangladesh during the period 1996-2005. The

corresponding shares for Bangladesh and China stand at below 75 per cent and 80-90

per cent respectively. The top five product groups contributed 76 per cent of the total

garment export earnings of Bangladesh from the European Union in 1996, and that

share increased to 82 per cent in 2005. The corresponding changes for Bangladesh

and China were from shares of 62 per cent and 34 per cent in 1996 to 54 per cent and

45 per cent in 2005 respectively. This trend demonstrates that product diversification

in Bangladesh is lower than that of Bangladesh and China in exporting garments

products to the European Union market. Duty- and quota-free access of garment

products manufactured under two-stage local transformation (yarn to fabrics, and

fabrics to garment) have accelerated the exports of knit garment products from

Bangladesh to the European Union. As the knit textile subsector is relatively less

capital intensive and requires relatively simple technologies, it managed to undergo

rapid expansion, benefiting from the European Union Generalized System of

Preferences. The woven part of the category has failed to utilize that facility owing to

a lack of sufficient backward linkages. In contrast to the European Union, both knit

and non-knit products have entered the United States market simultaneously, as no

special tariff or tax reduction incentive was available there for the import of garment

products from Bangladesh.

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Being the biggest contributor to the country's foreign exchange- around 76 percent-

and employing around 2.2 million people, 80 percent of them women, the importance

of nurturing a sector as vibrant and thriving as the garments industry, cannot be

emphasized enough. With export of Ready Made Garments (RMG) reaching 9.2

billion in 2007 and predictions of it rising to 12 billion or more in the next two years,

it is obvious that the industry is growing at an exponential speed. Greater demand for

our garments abroad indicates the improvement in quality of the products as well as

greater customer confidence, which translates to further expansion of the industry,

more employment, more consumers in the domestic market and a huge boost to the

economy. However, there are many jolts and stumbles along the road to economic

freedom and overcoming them will determine whether we can sustain the boom that is

waiting to happen.

Exports of knit, non-knit and made-up products to the European Union

(Millions of euros and percentage)

Exporter to

the Europeanunion

Year Knit

garments

Non knit

garments

Made up

products

Total

Total % Total % Total % Total %

Bangladesh 19962005

5062195

4460

6241334

5436

29132

24

11593661

100100

Bangladesh 19962005

5101508

2838

10121720

5544

320714

1718

18423942

100100

China 19962005

15386639

3436

248810178

5655

4321748

109

445818565

100100

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3.4 Export Growth and Contribution to GDP

3.5 Lead time

Lead time refers to the time required for supplying the ordered garment products after

the export order has been received. In the 1980s, the usual lead time in the garment

industry was 120-150 days for the main garment supplier countries of the world; it has

been reduced to 30-40 days in the current decade.12 However, in this regard the

Bangladesh RMG industry has improved little; for example, the average lead time is

90-120 days for woven garment firms and 60-80 days for knit garment firms. In

China, the average lead time is 40-60 days and 50-60 days for woven and knit

products respectively; in Bangladesh, it is 50-70 days and 60-70 days for the same

products respectively. Shortening the lead time is the most urgent priority task for

Bangladesh. The best way is to develop domestic backward linkages with the aim of

reducing production and distribution time.14 Such a strategy would contribute to

enhancing the deep-level performance of the industry and would have a positive

impact on surface-level performance. An alternative solution would be to establish a

central or common bonded warehouse in the private sector for storing raw materials

usable in the export-oriented garment industry, with special incentives such as duty-

free import. While such a solution is the fastest way to improve surface-level

competitiveness by reducing lead time, it carries the risk of delaying deep-level

competitive performance-enhancing initiatives and the long-term development of the

industry.

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3.6 Linkage expansion

Year/unit

1999/2000 2000/01 2001/02 2002/03 2003/04

Yarn Productionconsumption gap

Thousandtons

145488343

174495321

192500308

275525250

290532242

fabric Productionconsumption gap

Millionmeters

116036502490

118036752495

119036902500

123037402510

126038002540

Backward linkage expansion of the Bangladesh RMG industry.

3.7 A Glimpse of the growth and status of Ready Made Garment Export of

Bangladesh:

Year Export of RMG

(in million US $)

Total export of

Bangladesh (in

Million US$)

% of RMG to

total export

1993-94 31.57 811.00 3.89

1994-95 116.20 934.43 12.441995-96 131.48 819.21 16.06

1996-97 298.67 1076.61 27.74

1997-98 433.92 1231.20 35.24

1998-99 471.09 1291.56 36.47

1999-2000 642.16 1523.70 40.96

2001-2002 866.82 1717.55 50.47

2002-2003 1182.57 1993.92 59.31

2003-2004 1245.01 2382.89 60.64

2004-2005 1555.79 2533.90 61.40

2005-2006 2547.13 382.00 65.612006-2007 3001.25 4418.28 67.93

2007-2008 3781.94 5161.20 73.28

2008-2009 4019.98 5212.86 75.67

Apparel- The highest export earning sector

Year RMG EXPORT VALUE (MILLION US$)

1991-92 1182.57

1998-99 1445.22

1999-2000 1555.79

2001-2002 2232.09

2002-2003 2547.13

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2003-2004 3001.25

2004-2005 3781.94

2005-2006 4019.98

2006-2007 4019.98

Share of RMG in countrys 2008-2009 total export:

Commodity Export Share (%)

RMG 79.64

JUTE GOODS 2.83

RAW JUTE 1.21

TEA .06

LEATHER 2.18

CHEM. PRODUCTS 1.77

FROZEN GOODS 4.23OTHERS 12.28

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CHAPTER 4

Main Body

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4.0 Background of Ratul Knitwear & Fabrics LTD.

Welcome aboard to voguish cosmos of Ratul Group. We take this opportunity to

introduce you with our exclusive collection of simple yet stylishly elegant garments

and accessories, created from the finest quality fabrics. Our tireless efforts and keen

eye on quality has positioned us amid choicest ladies garments manufacturers situated

in heart of Bangladesh. Our fundamental mission is to make you confident to enjoy

the look that is created with great concern for quality standard products, that too at

rates you feel delighted with Ensconced in 1995, we have been consistently engaged

in manufacture and export of finest quality Promotional Garments, Western Wears,

Ladies Garments and any requirements of Buyers. State-of-the-art production unit

accompanied by diligent team has heartened us to accomplish bulk orders on swift

pace. Quality is the key drive of our company thus it has perpetually monitored by our

quality experts, right from selection of raw material to final shipment. In addition to

this, respecting your creativity we also provide customizes services. We also provide

services for any custom made samples of any fabric which you wish to produce,

fabricate of manufacturer. All designs are developed within house with arrangement

of power driven cutting machines. Fabrication of garments right up to finished stages

is undertaken within premises under a team of highly specialized and experience

professionals and designers. Our highly trained staff and well equipped washing and

dry-cleaning facility ensure high quality control, thus quality of our production

matched with international standard. All this help us to achieve our aim which is to

fulfill the expectation of our valuable customer. Our company is a renowned export

house with rich experience of 14 years. Our raising sales graph is touching new

heights of success. We are shipping 50, 00,000 Pecs. Per year, which is a live example

of our ever expanding clientele? Last but not the least, combine efforts of our team,

ht-tech manufacturing facilities, amplified experience and innovative vision has

enabled us to stand far ahead from our competitors.

4.1 A Study on Ratul Knitwear & Fabrics

In the business world today no major player in apparel industry can ignore capability

of Bangladesh in offering qualitative and valuable products. Ratul Knitwear & Fabrics

Ltd has the capability of providing a bridge between our overseas customers / buyers

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and local manufacturers in Bangladesh to ensure quality, services, timely deliveries

and dherence to buyers quality standards. In today's world the key to success of any

buyer is to identify- the country to source the right product at right price. This is

where the company - is step in to cater the buyer needs regarding communication,

quality and most of all timely delivery.

4. 2 Location and Historical background:

Ratul Knitwear & Fabrics Ltd is a production-based organization with basic objective

of providing marketing related services to own garments manufacturers.

The Company started its business operation in1988 with a well decorated office

at Baridhara DOHS, House- 161(2nd floor), Road-1. Initially the company used to

bring order of garment products from Local buying house. Later it also entered

into the European market and started to bring order from the buyers of Sweden,

and Germany and also many others countries.

In 1997, for better quality service to local manufacturers the company started to

supply garments accessories to the garments manufacturers. Through its company

also owned some accessories. Also Company owned manufactures factory Ratul

Knitwear & Fabrics Ltd. For a smooth manufacturing the assurance of on time

delivery. To assure this supply, Ratul Knitwear & Fabrics Ltd. Utilizes two

sources. One is its sister concern Company. Another is the outsourcing from its

suppliers of long term relationship. As a result the manufacturer doesn't need to be

worried about the availability of accessories.

By arranging all the accessories for suppliers, the company reduced the work

pressure of its suppliers by helping them only to concentrate on production.

Besides supplying accessories the company also controls the product Quality of

the suppliers by sending its quality inspector to the factories. Thus the company

ensures the quality o f the suppliers products.

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As a representative of foreign buyers and local buying house, the company makes

a product sample for the buyer according to buyer specification.

The Company also searches for a good supplier for the buyer to execute his order.

Finally the company offers to inspect the buyers product to ensure that the

product is at right quality and in right quantity.

The Company maintains a constantly high standard of business conduct, ethics

and social responsibility. It takes pride in the efficiency of what it does and always

employees the most effective and latest technology available. Their mostimportant asset is the people who make up the company.

The Company is committed to growth and improvement of all aspects of its

operation and willing to be a leader in the industry.

4.3 Vision

To set a precedent in the global garment manufacturing industry through continuous

innovation, exceptional products, focused services and enhanced customer

satisfaction.

4.4 Objectives and Mission

Ratul Knitwear & Fabrics Ltd realizes the need to stake out a competitive segment in

the changing global market of today through technological excellence and human

expertise.

To establish our self as a one stop source for the Global Knit Apparel market.

To satisfy and meet customer's expectation by developing and providing

products and service on time, which offer value in terms of Quality, Price, and

Safety & Environmental impact. We know Japanese industry have pioneer for

inventory management techniques such as just-in-time (JIT) systems. We follow

by JIT systems in our industry.

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To assure complete compliance with the international quality standards.

To provide the employees internationally acceptable working

condition/standards.

To promote the development and best use of human talent & equal opportunity

employment.

To procure the most advanced & sophisticated technology suitable for

producing desired product.

To attain highest level of competence through continuous development of the

professional management system and to ensure complete transparency in all

aspects of business.

4.6 Organizational Goals

To employ resources as incendiary for the growth of RMG sector.

To provide service for the parties involved and invention of the necessary new

service dimension.

To search for new buyers for investment and help to develop products to suit

such needs.

4.7 Principal Objectives:

Profit maximization

To provide quality product.

.

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4.8 Organ gram of the Ratul fabrics and knitting: Organ gram of the Ratul fabrics

and knitting as folling graphs

A. PLANNING:

Basis and Presumptions

1. This project is based on single shift basis and 300 working days in a year.

2. Since this industry is labor-intensive, the working efficiency is considered at 75%.

3. Costs of machinery and equipment/ material indicated refer to a particular makeand approximately to those prevailing at the time of preparation of this project.

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SamplingDepartment

SewingCutting Finishing

Managing Director

Director

Executive Director

Chairman

General Manager

MerchandisingDepartment

AccountDepartment

ProductionDepartment

ShippingDepartment

CommercialDepartment

AssistantMerchandising


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4. Installation and electrification cost is taken @ 10% of cost of machinery andequipment.

5. Non-refundable deposits, project report cost, trial production, security deposits withElectricity

Board is taken under preoperative expenses.

6. Depreciation has been considered:

(a) On Building @ 5%

(b) On plant and machinery @ 10%

(c) On office furniture and fixtures @ 15%

(d) On other fixed assets @ 15%.

7. Interest on capital investment has been taken @ 14% per annum. (Self financing)

8. Minimum 25% of total investment is required as margin money.

Implementation Schedule

Implementation period in months for executing this project in stage-wise is givenbelow:

1. Selection of site/working shed 1 month

2. Formation of company (ownership/partnership) 1 month

3. Preparation of feasibility report 1 month

4. Registration with commissioner of Industries/DIC 1 month

5.Arrangement of finance (Term loan and workingcapital)

3 months

6. Procurement of machinery and equipment 1 month

7. Plant erection and electrification 2 weeks

8.Arrangement of raw material including packagingmaterial etc.

1 month

9. Recruitment of manpower 1 month

10. Selection of market channel 1 month

11.Miscellaneous works like power/water connection

etc.

2 months

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Considering that some of the above activities may be overlapping, the projectimplementation will take a total period of six months approximately for starting the

production.

Addresses of Machinery and Equipment Suppliers:

1. Paras Special Machine Co.2. Vijay Sewing (P) Ltd.3. Daniel Industrial Machines Pvt. Ltd.4. Apparel and leather5. Creze Industrial Sewing company ltd.

Raw Material Suppliers:

1. Powerloom Cloth Manufacturing Centre

2. Moonward Spinning and General Mills3. Sinha Co-operative Spinning Mills4. Mondal Textiles Ltd.5. Aman Spinning General Mills

B. ANALYSIS

Market Potentiality

As most of the people are dependent on fashion as well as leading any sorts of

garments product demand are raising day by day. Higher number of production as

well as the supply or meet uyp the demand are the basic conditions to survive in the

industry. As a result the market is spreading because of the growing number of people

as well as increase of urban people which is mostly influenced by the young

generation. Readymade garments are the choice of urban people. It is also gaining

wider acceptance in semi urban and rural areas. The huge charges made by tailors and

delay in delivery have made people to switch over to readymade garments. In

domestic market and export market, it has made spectacular progress in the last

decade. This industry is becoming very vibrant and lot of foreign investment pouring

in this industry because of low risk and high earning nature of this industry. As these

products are fashion oriented, entrepreneurs should always keep in mind the changing

fashion styles. Considering its advantageous position, it is assumed that there will be

no constraint in marketing of gents readymade garments. We lead keeping in mind the

current market trends and the emerging requirements all over the world. Therefore,

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we have chartered our growth plan accordingly. We have streamlined our

manufacturing capabilities for mass production. We have integrated them with

automated manufacturing systems with ERP, which enables real time production

management and gears us for the challenging future.

Technical Aspects

Process of Manufacture

Procurement of Fabric: Dyed/ bleached/printed cotton/synthetic fabrics as per

demand are to be procured from the open market. The fabric will be inspected by

laying on the inspection table against light before cutting so that unevenness in color/

shade or any other fault, if any visible in the fabric are eliminated.

Cutting and Stitching: The inspected fabric is placed on the cutting table in layers

and then the different parts of the respective garments are demarked by a chalk as per

different sizes. Cutting is carried out by the cutting machine. Stitching is carried out

for individual portion of the garments by skilled workers with the help of over lock,

lock stitch machines etc.

Washing, Checking, Pressing and Packing: All garments are charged into washing

machine containing mild detergent and washed for 4 hours in order to remove dirt and

stains acquired during the manufacturing process. After washing, the garments are

hydro extracted to remove excess water and after this, these garments are dried in

tumbler dryer. Final checking is done before pressing and packing on the checking

table so that any fault in the piece may be removed and protruding threads eliminated.

The individual pieces are pressed by steam presses to remove any wrinkle marks and

packed in the carton boxes.

Quality Control and Standards: The quality of garments mainly depends on quality

of fabric used. Therefore, care must be taken while purchasing fabrics to ensure good

color fastness properties, uniformity in shade etc. Generally garments are made as per

customer's specification in respect of size, design and fashion.

Motive Power: Total 55.5 HP is required to run this unit at installed capacity.

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The process of manufacture does not generate pollution. However, entrepreneurs are

to contact State Pollution Control Board for necessary guidance. Maximum care

should be taken while selecting the machinery and other electrical equipments so as to

ensure minimum power consumption.

Financial Analysis

Cost Heading

Theoretical Output Of financial Analysis

Hardware

Is it more cost effective to buy or lease?

Include maintenance agreements.

If purchasing will you pay up-front or enter into a financingagreement?

Software

How many licenses are required in each phase of the project?

Are future annual increases capped?

Equipment

Is it more cost effective to buy or lease?

Do you need maintenance agreements for printers etc?

Project Staff

Include recruitment costs e.g. advertising or agency fees.

Include employers on-costs e.g. pension & NI.

Where staff are on incremental pay scales allow for annualincrements.

Allow for annual pay increases.

Do you need to allow for overtime working?

What will happen at the end of the project - do you need to build inredundancy payments?

Other Staff

Time

Do you need to reimburse other departments for staff time assistingthe project e.g. porters moving equipment, IT staff overtime, staffattending meetings/training?

Consultancy

Are consultants paid a daily rate or a fee for the job?

What are their daily travel and expenses limits?

Where will they be travelling from and how often?

.

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StaffDevelopment

What training is required at each stage of the project and for howmany people?

Can you save money by advance block booking of external training?

Is it more cost effective to train on-site rather than pay travel costs?

Are there any online training materials available?

For IT staff weigh up the cost (including time) of training versustaking on skilled staff at higher salaries.

Office

Overheads

Include any chargeable items such as heating, telephones, security,postage etc.

Travel Include travel to meetings, conferences and training courses.

HospitalityWill you be required to provide catering for meetings or training

events?Consumables Stationery, printer cartridges etc.

ContingencyWhat is a reasonable contingency estimate given the amount of riskand uncertainty in the project?

Production Capacity (per annum)

Product Quantity (Pcs)

Gents Shirts 90,000

Gents Trousers 90,000

A. Fixed Capital Total Fixed Capital (i) + (ii) + (iii) 575800TK.

(i) Land and Building

Land 800sq.mt. @ Tk. 1500p.s.m. Amounting Tk.1200000

Building Area

Factory shed 250 sq. mt.

Store (Raw material) 50 sq. mt.

Store (Finished goods) 50 sq. mt.

Office etc. 25 sq. mt.

Total Covered Area 375 sq. mt.

Total Construction Cost @ Tk. 3000/sq.mt. 1125000

Total Investment in land and Building 2325000

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(ii) Machinery and Equipments

Sl.

No.Description No.

Rate

(In Tk.)

Amount

(In Tk.)

1. Fabric inspection machine 1 200000 200000

2.8" Power driven cloth cuttingmachine

1 90000 90000

3.Single needle lock stitchmachine with motor

50 20000 1000000

4.2 Needle over lock safetystitching machine with edgetrimmer

1 50000 50000

5.

Double Needle lock stitch

machine 2 75000 150000

6.Double Needle feed of the armmachine

1 120000 120000

7. Button holing machine 1 160000 160000

8. Button stitching machine 1 75000 75000

9. Hot fusing press 1 80000 80000

10.Garment washing machine 25kg. capacity

1 160000 160000

11. Hydro extractor 25 kg. capacity 1 90000 90000

12. Tumbler dryer 25 kg. capacity 1 160000 160000

13.Flat bed steam iron press withvacuum table

4 85000 340000

14. Zig zag embroidery machine 1 45000 45000

15. Generator set 30KVA 1 200000 200000

16. Washing room trolleys 4 12000 48000

17.Testing equipments (ends/pickchecker, electronic balance,laundro meter etc.)

LS 65000 65000

Total 3033000

(iii) Other Fixed Assets

(a) Erection and installation 300000

(b) Office furniture 70000

(c) Pre-operative expenses 30000

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Total 400000

B. Working Capital (per month)

(i) Staff and Labor Wages

Sl.

No.Designation No.

Rate

(In

Tk.)

Amount

(In Tk.)

1. Marketing Manager 1 16000 16000

2. Sales Representative 2 8000 16000

3. Accounts Officer 1 6500 6500

4. Store-keeper 1 5000 5000

5. Clerk/Typist 2 4000 8000

6. Electrician 1 5000 5000

7. Peons/Watchman 2 3000 6000

Total 62500

Production Staff

1. Production Manager 1 16000 16000

2. Supervisors 2 8000 16000

3. Cutting Master 1 10000 10000

4. Skilled Workers 55 4800 264000

5. Pressman 4 4500 18000

6. Unskilled workers 6 3250 19500

7. Lab. Attendant 1 5500 5500

Total 411500

Perquisites @20% 82300

Grand. Total 493800

(ii) Raw Material (per month)

Sl.

No.Description Unit Qty.

Rate/

Unit(TK.)

Amount

(In Tk.)

1. Cotton fabric shirts mtrs 19000 90 1710000

2. Blended fabric for mtrs. 12000 160 1920000

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trousers

3.Trims andembellishments

Nos 15000 16 240000

4. Sewing thread mtrs 15000 4 60000

5. Washing detergents LS 3900

6. Packing material Nos 15000 4 60000

Total 3993900

(iii) Utilities (per month) (TK.)

Electricity 32,000

Water Charges 2,200

Fuel for generator 10,000

Total 44,200

(iv) Other Contingent Expenses (per month) (TK.)

(a) Advertisement and publicity 10,000

(b) Postage/Stationery 2,000

(c) Repair and maintenance 13,000

(d) Transport/travelling charges 5,000

(e) Insurance 1,000

(f) Telephone 3,000

(g) Miscellaneous expenses 4,000

Total 38,000

(v) Total Recurring Expenses (per month) 45, 69,900

(vi)Total Working Capital for 2 months 91, 39,800

C. Total Capital Investment (TK.)

(i) Land and building 23,25,000

(ii) Machinery and equipment 34,33,000

(iii) Working capital for 2 months 91,39,800

Total 1,48,97,800

Machinery Utilization: Capacity utilization is considered as 75% of installedcapacity.

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(1) Cost of Production (TK.)

Recurring expenses 54838800

Depreciation on building @ 5% 116250

Depreciation on machinery @ 10% 303300

Depreciation on office furniture and other fixed assets@ 20%

80000

Interest on total investment @ 14% 2085692

Total 5,74,24,042

(2) Turnover (Sales)

Pcs. Rate/Pc. Amount (TK.)

Gents shirts 90000 290 26100000

Gents trousers 90000 390 35100000

Total 6,12,00000

(3) Net Profit 37, 75,958

(4) Net Profit Ratio (Net profit/Turnover) 6.17%

(5) Return on Investment (Net Profit/Total Capital Investment) 25.35%

(6) Break-Even Point

Fixed Cost (TK.)

Depreciation 499550

Interest on capital investment 2085692

40% of wages of staff and labor 2370240

40% of other expenses 177600

Insurance 12000

Total 5,14,5082

B.E.P.

= Fixed cost (5,14,5082)

---------------------------------- 100

Fixed cost +

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Profit(5,14,5082+3,77,5958)

= 57.67%

NPV: (6, 12, 00000/ ((1+.14) ^1.5))) - 1, 48, 97,800

=5, 02, 79,869-1, 48, 97,800=3, 53, 82069As it shows a positive NPV, so the project is financially viable for the

organization

BCR :( 5, 02, 79,869/1, 48, 97,800)=3.375

Benefits are based on achieving 3.375 tk. for each taka cost that refers a positive tone

to the project viability.

Financial information has prepared on an exception-reporting basis with the focus on

things which are significantly different to the original budget. When any major

discrepancy occurs, the Project Manager is charged with the responsibility to identify

why the variance has happened and whether it constitutes a systemic failure.

Appropriate corrective action agreed and implemented.

Economic:As this project is creating a positive output for the organization or generating profitdirectly its creating

1. Higher foreign currency reserve

2. Contribute in economical growth

3. Contributing in GDP

4. Promoting the societys living standard

5. Creating employment

6. Development of rural and suburban areas

Ecological:

A garment industry may support on the economical activities as well societies, but

they are creating a negative impact on the environmental issues like air pollution by

smoke, water pollution by through garbage into the river and create the damager of

ecosystem, reduce the production capacity of natural product, infertility of land

increasing which are great concern for this project activities.As a project manager we

can refine our smoke and garbage which is environmentally supported and create the

awareness to the employees to protect or practice not to through the garbage here and

there.

C. IMPLEMENTING & REVIEWING

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The purpose of the product development process is to certify that the supplier

understands and adheres to the specifications established for a specific product.

Typically, a retailers objective is to provide their customers with the highest level of

quality and service at the most competitive price. Clothing stores can meet this

objective most successfully when their supplier fully understands the product

development process. The development process is critical to ensuring customers

satisfaction and minimizing customer returns. Most retailers approach to product

development consists of a multi-step process that must be completed before finished

goods are produced. Here are a few common steps in the product development

process.

Product Review Meeting

Submission of Trimming & Components

Fit Testing

Photo Samples

Performance Testing

Product Review Meeting: Apparelbuyers, merchandise managers, quality assurance

personnel, or other members of the retailers staff can schedule a product review

meeting with the supplier. This meeting should be conducted directly after the

merchandise manager approves the concept for development. The purpose of the

meeting is to review the preliminary product and package specifications and to ensure

that the supplier is aware of the companys quality and product development

procedures. The meeting should be of a technical nature. Therefore, the supplier

should bring to the meeting the appropriate representation from their staff. Expect to

discuss the manufacturing process in detail and address any potential manufacturing

concerns or limitations in regard to manufacturing the particular item being

discussed. In this meeting, the supplier should be provided a preliminary spec file

with details of the garment that is to be manufactured. The supplier should be

requested within a short period of time to formally acknowledge their understanding

of the requirements. It is a good idea to obtain this in writing.

Submission of Trimming: before apparel production begins, it is critical that the

buyer approves all components that will comprise the finished product. Some buyers

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will require review of all trimming and others will require the approval of major trim

components only. For example, some buyers will want to see examples of the actual

sewing thread. However, others may not require viewing the thread. It is important

to understand what the buying company wishes to review prior to production.

Experienced fashion merchants will require that you submit trim submissions on an

appropriate form. This allows both the supplier and the purchaser to maintain well

organized records. Here are a few examples of items that may need to be submitted

for review.

Lab dips, strike offs (screen printed swatches), reeling of yarn in all colors.

Production fabric, knit downs, handlooms, etc. Most often required in a large

enough size to containing full pattern repeat.

Care labels & main labels

Clothing Components: Buttons, lace, zippers, interlinings, shoulder pads,

elastics, hangers, hangtags, price tickets, etc.

Packaging: ASN labels, chip board, jet clips, tissue paper, poly bags, etc.

In addition to trimming, you will most likely be required to submit Fit Samples, pre-

production garment samples, testing samples, TOP Samples (Top of Production

Samples), etc. You may also be required to submit documents during this phase such

as flammability documents etc.

Fit Testing: some fashion companies will require fit testing as part of the product

development process. In order to ensure proper fit, steps must be taken to evaluate

the garments comfort. This process is to both monitor the manufacturer, but also to

make sure the original size spec developed was proper. Even if the manufacturer

follows the spec file perfectly, during the fit process the fit technician may discover

that adjustments may be needed. Some companies will conduct the fit testing on live

fit models and others will do the testing in fit forms (mannequins). The

merchandisers should advise the supplier regarding which size garments they wish to

review for fit. Some companies will review only one size, and others like to review

the smallest and largest size. For example, if production will be ordered in a scale

including small thru double XL, they may require one sample in size small and one in

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XXL for the fit review. Again, the retailer (or company purchasing your product),

should advise you regarding the sizes they require for review.

There are many different How to Measure Guides in existence. Make certain to

receive a copy of the how to measure guide that your buyer utilizes. This is the only

way to insure that you provide accurate garments. After the fit testing is complete, the

final spec file should be issued in writing.

Photo Samples: some retailers will require photo samples. These samples are

utilized for developing catalogs or advertising. Photo samples typically do not require

all final trimming such as brand labels, but the outside appearance of the garment

must be in correct silhouette and color. The photos must represent exactly what the

finished product will look like when shipped (the outside visual appearance; does not

need price tickets, hangers, etc.). Unfortunately, retailers cannot wait for bulk

production samples because catalog photos and advertising photos are needed far

before the finished garments are ready to ship from the factory. Again, not all

retailers need photography samples. By the way, some companies use digital fabric

printing to make samples more quickly if they have an urgent photo shoot pending.

Performance Testing: This is a very important aspect of the product development

process. All products developed must passperformance testing requirements. It is

the suppliers responsibility to ensure that all products produced meet or exceed the

buyers performance standards. Before entering into an agreement to manufacturer

apparel, be certain to fully understand the quality standard requirements requested by

your buyers. It is normal practice to have both fabric and garments tested before

product is delivered. Typically, the testing is done at a third party testing facility such

as CTL, MTL, etc. Often times the buyer is the one to assign the testing

lab. Sometimes the retailer (buyer) will submit the garments for testing. However,often the buyer will require that the supplier submits the fabric and garments directly

to the testing laboratory and then provide them with copies of the test results. Testing

will be done prior to production and after final production is complete. Many retailers

will also do surprise testing on garments after they arrive into the stores. This

technique is used to discourage suppliers from submitting garments for testing that are

not actually the same quality as final production. Some analysis of clothing will

require more testing then other items. For example, items that claim to flame

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retardant, water resistant, and anti-bacterial, etc., may require additional testing. Also,

some children's apparel may require additional safety evaluation.

Above are "some" of the common issues involved in the product development

process. This analysis unfortunately, can not contain every aspect. The overall

suggestion from Apparel Search is to make sure that both the buyer and supplier fully

understand the programs requirements. Ask each other questions and communicate

openly. It is in everyone's best interest if the process runs smoothly and results in top

quality garments.

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CHAPTER: 5

FINDINGS

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FINDINGS:

1. They don't provide any training to their employees.

2. Absence of employee reward system except their normal pay scale.

3. Nice working environment is strength for this organization.

4. Professional pace of work exist within the management.

5. Existence of technological support such as e-mail, fax, scanner, phone,

printing device etc. in the organization.

6. Company doesn't hold any policy regarding employee creativity or inanition

Company holds international outlooks for exporting

7. A tendency to focus on initial purchase costs and ignore elements such as

staffing

8. Poor planning that doesn't allow sufficient resources for training and staff

development

9. Blind faith in 'optimistic' supplier estimates

10. Project managers don't think their senior managers could cope with knowing

the true cost

11. A fully fledged in-house design team creating & developing exciting

collations each seasons

12. Qualified and experienced quality control team

13. Knits manufacturing unit

14. A complete set up for dying and printing unit

15. Label manufacturing unit

16. Elastic manufacturing unit

17. Computerized management unit

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Permanent Buyers: For its reputation' of committed organization it has built a

marketing network with some prominent buyers. These buyers are not easily

vulnerable to other buying houses, as they are satisfied with RATUL KNITWEARS

& FABRICS LTD. for its efficiency and effectiveness.

Collaboration with backward linkage industry: To be ever successful in their

commitment to their buyers they always assure the on time delivery of the accessories

needed in the manufacturing process. Merchandizing Inc. has taken the responsibility

of supplying these accessories to the manufacturing process for its assured supply. For

the convenience of this responsibility they have built long term relationship with the

suppliers of accessories that they don't manufacture and done necessary paper work

with strong term and conditions with those accessory suppliers.

Long-term relationship with butlers: RATUL KNITWEARS & FABRICS LTD.

honors the long-term relationship with their buyers.

They are in the growth industry: With the advantage of increased attraction toward

fashion buying houses are enjoying a perineum growth in its

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