Sunday, 25 September 2016

Indian Entrepreneur

     We often get inspiration from people who have become very much successful in their commercial  life . Businessmen occupy chief position among such people. However not all are born with a silver spoon in mouth. They work really hard, fight with circumstances, strain every nerve to achieve what they believe in. They become our source of inspiration not because of the wealth they have achieved but due to the fight they fought against all odds, leadership and management skills exhibited during course of life that helped them to make logical decisions which subsequently resulted in creating business empire today.Today, I am going to discuss about one such person named 'Chandubhai Popatbhai Virani' ,owner of Balaji Wafers Pvt. Ltd. The ppt given below explains in brief his business journey which is truly inspirational not only for management students but for anyone who thinks big and desire to achieve his dream.
     Born in Dhundhoraji village of Kalavad Taluka and was a son of farmer Popatbhai Virani. In 1972, he and his brothers Bhikhubhai, Kanubhai and Meghjibhai migrated from a small village in Jamnagar district to Rajkot. Due to poor economic conditions, his father sold ancestral agriculture land and gave Rs. 20,000 to his sons to venture into business. He Invested in farm equipment & fertilizers business. Unfortunately due to lack of knowledge and experience; someone supplied them duplicate fertilizers and they lost all their money. This business failed drastically after which he Started canteen for college students when he was just 17 years old (that too failed).
      Then in 1974 with his brother Bhikhubhai he started working in Astron cinema canteen. They began selling refreshments. later on, there were given responsibility to manage ticket counter as well as doorkeeper which they fulfilled religiously. Seeing their enthusiasm Govindbhai – the cinema owner, handed over the canteen to them on contract basis in 1976. 
     They used to buy other local brand or loose wafers and packet them. The turning point came was in 1982 when they started making their own chips and wafers with just 1 tawa. Later on decided to sell their wafers to other shops. This was the time when they first coined their brand “Balaji. Their motto was to satisfy end consumer. And they did.From 1 shopkeeper to 10 and in time they had 200 loyal customers. He himself used to cook wafers. Till 1989, wafers were made at Virani residence and were being distributed in and around Rajkot city. But due to demands increasing massively, in the year 1989; for the first time Balaji Wafers invested INR 5 lakhs and took their biggest leap by setting up a plant in Aji, ‘Gujarat Industrial Development Corporation’s’ industrial estate better known as ‘GIDC’ in Rajkot.
     In 1982-1989 set up machines for peeling, cutting with 10-20 kg capacity but profits were wafer thin. In 1989 they brought 1000 meter plot with Rs 3.6 lack bank loan and expanded from 2 tawas to 8. After 3 years they succeeded with turnover of Rs 3 crore. In 1989,set up their first automated wafer-making plant at a cost of Rs 50 lacks. In 2003-04, installed a fully automatic machine with capacity of 1,200 kg per hour. Between 2000 and 2006, Balaji captured a 90 % chips industry in Gujarat, and also got leaders in namkeen with 70% market share . Likewise, its markets in Maharashtra and Rajasthan also increased exponentially. They set up yet another machine in Valsad in 2008 with a processing ability of 8,000 kg of potatoes producing 2,000 kg of Murphy chips per hour. The troupe now has a susceptibility to make around 450,000 kg of potatoes per day and 400,000 kg of namkeen per day.
     Small wafer business which started in a canteen of small theater with one tawa has now expanded to a big fully automated plant which covers over 85,000 sq. m and creates indirect employment for more than 1000 people. In 2014 the turnover was around rs1000 crore including exports of products to abroad. The Economic Time recognized Balaji Group as 'Sultan of Wafers’. International magazine i.e. Asia Pacific food online published a special article with 'Chip Off the Old Block' tag.
(See Below for detail power point presentation)

Don't forget to share your remarks in comment box

Importance of Arctic

     The Arctic could be completely ice-free as early as 2020. The ice cover on the Arctic has come down to 4. mio sq Km as on September 15, 2016 from an average 6.22 mio sq Km in 1981-2010. This appears to have been the lowest extent of the year and is tied with 2007 as the second lowest extent on record. This offers significant implications for global trade, energy security, and geopolitics.
     Lets understand the energy importance of he region. The Arctic contains vast energy sources 90 Bln barrels of oil, 1,669 trillion cubic feet of natural gas, 44Bln of barrels of natural gas. In total it contains 13% of the world’s undiscovered oil resources and about 30% of undiscovered natural gas resources. The melted navigable waters could also be used for generating thermal energy with the temperature differences on the surface of this water and beneath.

The major impact would be on shipping industry. A more accessible blue Arctic could reorient transoceanic energy trade flows, logistical infrastructure such as shipbuilding and ports. Shrinking of ice cover will open up potential sea routes through which navigation will be carried out. 
     First is North West Route. It is a sea route connecting the Atlantic and Pacific Oceans through the Canadian Arctic Archipelago. Previously it was virtually impossible because it was covered by thick, year-round sea ice. But climate change is allowing commercial traffic to pass through this once impossible route.The potential benefits are ship routes from Europe to eastern Asia would be 4,000 kilometres shorter, The vast mineral resources of the Canadian North will be much easier and economical to develop and ship to market, the new route will be 40% shorter than the existing route via Suez Canal. It will cut shipping time by 12 days.
     Another route is Northern Sea Route. The Northern Sea Route is a shipping route officially defined by Russian legislation as lying east of Novaya Zemlya and specifically running along the Russian Arctic coast from the Kara Sea, along Siberia, to the Bering Strait. The entire route lies in Arctic waters and within Russia's Exclusive Economic Zone (EEZ). While the Northeast Passage includes all the East Arctic seas and connects the Atlantic and Pacific oceans, the Northern Sea Route does not include the Barents Sea. The NSR extends for about 3000 miles. The factual length of the route in each particular case depends on ice conditions. The potential benefits this route offers are that it is alternative to the traditional sea route through the Indian Ocean shrinking the distance between Asia and Europe considerably. The route will connect shipping from Europe to Asia in 35 days, as opposed to the 48-days. The number of commercial ships transiting through NSR grew from 4 in 2010 to 71 in 2013, which speaks of the rising importance of the Arctic. A substantial part of the Arctic hydrocarbon resource is in NW Russia and offshore in the Barents and Kara seas at the western gateway of the NSR. Current and future development of this Russian resource base is the main driver for increased shipping on the NSR in the coming decades. In 2015 a total of 5.4 million tons of goods and project cargo were transported on the NSR, up from about 4.0 million tons in 2014 and 3.9 million tons in 2013. It affects the strategic relevance of existing sea routes navigating through the Indian Ocean. Shipping routes may shift from politically unstable regions like West Asia and piracy-infected routes like the South China Sea, the Malacca Straits and the Gulf of Aden & can bring a shift from the Asia-Pacific to Trans-Atlantic economies,. Hence, countries will rework their strategic calculations.
     Therefore, this is an important development in global scenario which offers various opportunities mainly in sectors such as shipping and minerals and fishing industry. In shipping sector, the new routes offer alternatives to the Panama and Suez canals which might redesign global logistics. Many big MNCs are already conducting research studies on impact of this alternate routes on business. ex- Norwegian companies are collaborating with their expertise in the Centre for High North Logistics and the newly formed Arctic Maritime Cluster. Opening up of the Arctic for commercial cargo offers a faster route for some shipments between Europe and Asia. More goods are shipped from Europe to Asia than the other way around. Therefore alternate routes will tremendously impact shipping industry globally.
     Now considering Minerals industry, It is important to note that the largest economies in the Arctic belong to Alaska (US) and Russia, mainly because of mining and petroleum activity. Of the international cargo-bearing voyages using NSR, 67% involved shipments oil products. therefore mining industry will be highly impacted due to melting of Arctic. In fact Many Norwegian companies have already collaborated with their expertise in the Centre for High North Logistics and the newly formed Arctic Maritime Cluster to exploit the opportunity. India is also keeping eye arctic trends for the opportunities to capitalize on. Indian companies have acquired 20% stake in the Yamal LNG project. In May 2014, ONGC Videsh and Russia’s Rosneft signed a MoU which paves the way for the companies’ cooperation in subsurface surveys, exploration and appraisal activities and hydrocarbons production in Russia’s offshore Arctic. India is also planning to invest in the Canadian northern Alberta oil sands deposit, the 3rd largest proven crude oil reserve in the world.The ice-breaker will play a vital role in the supply of cargo and equipment to the drilling sites, and protect the drill ships and oil platforms from the risk posed by ice caps. Hence, the icebreaker will also be useful for commercial interests.
     The melting phenomenon will also affect local fishing industry. Due to continued reduction in ice cover in the Central Arctic Ocean, fishery is likely to be mainly within the 200 miles of the coastal states. The five coastal states are all major fishing nations. They have their own extensive management and regulation regimes for their fisheries. Bilateral arrangements exist for cooperation on management of fish stocks , ex- Norway-Russia bilateral fisheries commission.
     Therefore, with melting of ice due to climate change arctic area will be more navigable offering huge economic opportunities to the world & would help securing natural resources for future needs. In addition it also bears capacity to change the course of political strategic equation around the world.

1.        Sanjay Chaturvedi - ‘Asia engages the Arctic’, The National Bureau of Asian Research
2.        Vijay Sakhuja – ‘India and the Arctic: Beyond Kiruna’, Indian Council of World Affairs
3.        Vijay Sakhuja & Gurupreet Khurana –‘Arctic perspective’, National Maritime Foundation‘The Arctic: challenges, prospects andopportunities for india’, Indian Foreign Affairs Journal

Don't forget to share your remarks in comment box

Saturday, 24 September 2016

Import Analysis of Denim in USA and EU

See below to view power point presentation of import analysis of Denim.  

      Key highlights of the denim imported into USA and EU can be analysed by understanding trade trends. Import of knitted apparel (HS61) in EU-27 grew at CAGR of 5.7% during 2005-13 and reached 44.19 USD billion .China is a leading supplier of EU contributing 37% followed by Turkey , Bangladesh, India ,TunisiaGermany, UK, France, Italy, Spain are key importers within EU-27 constitute more than 50% of imports of  HS61 denim commodities.Import of apparel & accessories (not knitted denim) in EU-27 grew at CAGR of 16.9% during 2005-13. Top 5 sourcing partners are China, Turkey, Tunisia, India, Bangladesh.These 5countries contributes 69% of the total imports in this category. Import of HS63 commodities in EU-27 rose at CAGR of 5.4% during 2005-13. Germany, UK, France are top importers contributing 85% in this category. China is a top exporter alone contributes about 39% of total imports in this segment .
     Total import HS61 commodities in USA reached 45.1Bln USD; China is the largest sourcing partner with 36% share while Vietnam is a emerging partner, Trade with other key players is influenced by Free trade agreements . US imports of HS62 commodities declined at CAGR of -0.4% during 2005-14,Sourcing from China declined while sourcing from Mexico has increased due to duty preferences and geographical location.U S imports of HS63 commodities has increased at CAGR of 3.5% with China, Pakistan ,India, Mexico, Turkey together contributing 86% of the total import in this category . Sourcing from Pakistan, India, Mexico, Turkey is increasing mainly due to increasing sourcing cost from China
       Import of HS61 denim into EU27 and USA .Import rose at CAGR of 5.7% during 2005-2013 & reached 44.19 USD billion for EU27 with China as a leading supplier contributing 37% ;Germany ,UK, France emerged as a key destinations.Import of knitted apparel grew at CAGR of 5.7% during period 2005-13. China is the EU’s largest source of textile imports by far, ahead of other important partners such as Bangladesh and Turkey contributing 37% of the total import in this segment Germany , UK, France, Italy, Spain together constitute more than 50% of import.  About 30% of India's textile exports go to the EU, with Germany and the UK accounting for the largest share.  Export from Bangladesh has been growing due to favourable duty structure such as ‘GSP benefits under the LDC quota under which export of 20% of its goods with zero tariff while 70% have a preferential rate policy
        The same commodity shows CAGR of 1.8% during 2005-2010 & CAGR 4.3 form 2010-2014 & shown CAGR of 2.9% during 2005-14 in USA . China’s share as a sourcing partner of USA has increased from 25% in 2005 to 36% in 2014. USA has FTA with Mexico, Hondurus, Salvador,& Cambodia which allows import of HS61 commodities at preferential rates. Sourcing from Vietnam increased at CAGR of 11% from 3.5 Bln USD in 2010 to 5.4 Bln USD in 2014 . Total import in this segment reached 45.1Bln USD; China is the largest sourcing partner with 36% share while Vietnam is a emerging partner, Trade with other players is influenced by Free trade agreements.
     Import of HS62 denim into EU27 and USA. Import rose at CAGR of 16.9% during 2005-2013 & reached 44.5 USD billion with top 5 sourcing nations contributes 69% of the total imports in this category Import analysis of HS62 commodities into EU-27. Top 5 sourcing partners viz. China, Turkey, Tunisia, India, Bangladesh contribute about 69% of total import in EU-27 in this category. Turkey has been the major partner of EU union only after china mainly due to richness in basic raw materials, geographical proximity to main European markets , Short logistics period due to geographical proximity, skilled labour, Customs Union agreement with the European Union.
     US imports in this category declined at CAGR of -0.4% during 2005-14,Sourcing from China declined while sourcing from Mexico has increased due to duty preferences and geographical location Import analysis of HS62 commodities into USA. Though China dominates as a sourcing partner, the total import value has decreased from 14.7 bln USD in 2010 to 14.3 bln USD in 2014 mainly because rising cost in China. Sourcing from Mexico has increased since 2010 particularly because of duty preferences granted by US government & geographical proximity. India ,Indonesia, Bangladesh ,India are other major exporter in this segment due to low manufacturing cost. Vietnam’s export increased at CAGR of 11.4% and is expected to rise further with signing of proposed Trans-Pacific Partnership (TPP) agreement.
     Import of HS63 denim into EU27 and USA. Import rose at CAGR of 5.4% during 2005-2013 with Germany UK, France are top importers contributing 85% while China is a top exporter alone contributes about 39% of total imports in this segment Import analysis of HS63 commodities into EU-27. This segment shows CAGR of 7.5% during 2005-2010 & CAGR 2% form 2010-2013 & shown CAGR of 5.4% during 2005-13. China alone contributed 31% ,42% & 39 % in year 2005,2010 and 2013 respectively. Germany UK, France are top importers in European Union contributing 85% , imported textiles of 8.6bln USD in year 2013.  Pakistan performs well compare to India as a key exporting partner due to duty-free duty free imports while ~10% import duty is applicable to India. China, Turkey, India ,Pakistan Bangladesh are top sourcing countries contributed 81% of the total imports into EU in this category.
     The US import of home textile rose at CAGR of 3.5% during 2005-2014 . Share of top 5 sourcing countries (China, Pakistan ,India, Mexico, Turkey) together contributing 86% of the total import in ths category has increased from 75% in 2005 to 86% in 2014.  China alone contributed about 53% of the total import in this category. China’s maintains significant advantage over other supplier in economies of scale , infrastructure, efficiency, expertise and stability.  Rise in sourcing from Pakistan, India, Mexico, Turkey due to increasing sourcing cost from China which is mainly due to rising labor cost in china leading to rise in overall production cost.

See Below for detail power point presentation

Don't forget to share your remarks in comment box

Thursday, 4 February 2016

Denim Industry

     Global denim industry is growing at CAGR 2.1 % since 2007 & it is expected to grow further at CAGR 2.19% to reach 60 Billion by 2020 . North America & Europe are the two major markets having~55% market share. It is dominated by jeans segment with more than 85% share while other emerging segments have small market share in industry. Total of 2.1 billion pairs of jeans has been consumed in the year 2014. US & Europe consumes more than 55% of the denim jeans.US is the biggest market for denim fashion, with per capita denim consumption is 8 pairs. Denim purchase is driven by factors such as fit, comfort, price, durability &quality. Germany ,France ,UK are major markets in western Europe while eastern European countries such as Turkey, Tunisia are key sourcing destinations for Europe. China, Turkey, Brazil ,Vietnam ,India & Pakistan are major suppliers with more than 50 % of the global denim production..
     Indian denim industry is one of the fastest growing having CAGR of 21.1% (2011-2018). It is projected to grow at 14.8% CAGR (2013-18) and expected to reach 4.8 USD billion market. It is characterized by domination of men's’ wear market 60% presence of unbranded players, low market penetration. It accounts for 5 % of the total apparel market in the country and also had 3% share in global denim industry. Mega metros & metro cities contributes 49 % of the market share in India. Men’s segment holds 85% share. Purchase is driven by increasing disposable income, westernization of work culture and the ensuing rise in popularity of denim jeans as business casual wear. 'Arvind' is one of the major players in Indian Market.
     Another feature is that 60 % market share lies with unbranded denim players operating on the lower price segment where awareness of quality of fabric, finishing and washes, design and fit are relatively low. With population of 1.2 billion & per ca pita consumption still much low (0.3), there is a huge scope for growth in domestic market itself .
     Denim Trade has shown negative growth. Export of denim fabric declined at CAGR of -2.74% while import declined at-17% due to low demand in western countries. Overall Export of Denim fabric has declined at CAGR of -2.74 % from USD 5 billion to USD 4.6 billion while import declined at CAGR of -17 % between 2011-14 from USD 4.4 billion to USD 2.5 billion mainly due to 3 main reasons. first, Popularity of low-cost knitted wear which has gained considerable market share. Secondly. Oversupply situation. Demand is growing at 3-5 % while supply is growing at 6-7 % . Lastly, Trade of denim containing more than 85% cotton has been declining due to introduction of man made synthetic fiber and its growing acceptability by consumers.
     China dominates the export and import of denim fabric having woven denim cotton less than 85%. China is the leader in  trade of denim fabric and contributed 54% of export while 41% o import in this category. China, India, Turkey, Japan, Italy, India, are key exporters in the segment. More than 50 % of denim is being produced in the region mainly because of ample availability of raw material, low cost of semi skilled & skilled labor and favorable duty structure. China , Turkey ,Columbia , Cambodia, Mexico are key importers. Imported fabric is being used to manufacture apparels such as jeans and other accessories and it is then exported to other nations such as Eu-28, USA, China etc. Overall trade of denim fabric having more than 85% cotton has declined due to introduction of synthetic fiber. 
China is the key trading country contributing 30% of total export & 21% of imports 
in this category in year 2014. The overall trade of this segment has declined due increase use of man made fiber in making of denim fabric. China, Turkey ,Tunisia, Mexico ,Italy are key importers where Imported fabric is being used to manufacture apparels such and then exported to other nations such as Eu-28, USA, China etc.
     The process flow in the making of denim includes the step by step process and technologies involved in making of denim fabric. It includes processes such as Spinning, Dye beam warping, Ball warping, Beam Warping, Rope dying, Beam dying, Slasher dying Slashing(un dyed), Re beaming , Slashing, Finishing, Desizing, Dying Finishing Finished fabric operations.

(See Below for detail power point presentation)

Don't forget to share your remarks in comment box