CLUSTER DEVELOPMENT PROGRAMME, INDIA DIAGNOSTIC STUDY SME THE HOME MADE- UPs CLUSTER PANIPAT BY R K BORUAH TEXTILES COMMITTEE MINISTRY OF TEXTILES, GOVERNMENT OF INDIA DEVELOPED UNDER THE CLUSTER DEVELOPMENT AGENT TRAINING PROGRAMME, ORGANISED BY UNIDO CDP, NEW DELHI & THE ENTREPRENEURSHIP DEVELOPMENT INSTITUTE OF INDIA (EDII), AHMEDABAD YEAR 2001 The views expressed in the Diagnostic Studies are those of the authors and should not be attributed to UNIDO or to the institutions they may represent. PANIPAT HOME MADE- UPs CLUSTER CONTENTS NO. TOPIC PAGE 1 INTRODUCTION 1.1 The Historical Perspective Of Panipat Textile Industry 1.2 The Present Scenario 1.3 About The City 1 2 THE PRODUCTION DETAILS 2.1 Sketch Of The Smes In The Cluster 2.2 Product Categories 2.3 Other Characteristics Of Panipat Made Ups 2.4 Process Flow Chart 3 3 ASSESSMENT OF OTHER INSTITUTIONS & THEIR LINKGAES 3.1 Technical Service Providers 3.2 Inter-Sectoral Linkages 3.3 The Cluster Map 8 4 SWOT ANALYSIS • Strengths • Weaknesses • Opportunities • Threats 11 5 EVALUATION OF THE CLUSTER'S ORGANISATION & PERFORMANCE 12 6 VISION OF THE CLUSTER 13 7 ACTION PLAN 14 PANIPAT HOME MADE- UPS CLUSTER 1 1. INTRODUCTION 1.1 THE HISTORICAL PERSPECTIVE OF TEXTILE INDUSTRY AT PANIPAT The textile history of Panipat started after the partition of India and Pakistan, when the weaver's community that was displaced from Hyderabad, a state in Pakistan was facilitated to settle in Panipat by the Government of Punjab, on the directions of Mahatma Gandhi. The following chronology presents the milestones of growth of the textile industry since then: 1947: Initially, these workers used to work with a frame loom of two treadles and manufacture 'Khes' and 'Durries' of coarse hand spun cotton yarn. The main markets for their fabric were in Assam, Bihar and Bengal. 1948: The National Textiles and the General Company of Panipat purchased Jacquard from Joan Harlekar and for the first time introduced it in the Panipat industry. 1960-70: New designs were developed for exports by the master weavers like Mr. Amrit Lal Batra and Mr. D.C. Bhatia. But it was only in 1970 that products entered the export markets through the initia tives of Shri Jaipuriya from Jaipur. During the same period, the hand knotted carpet business was started initially for the domestic market and later for exports. The carpet business was evolved as a result of yarn dyeing of woollens in 1970. 1975-80: Curtains were being made at Panipat by the copying the designs from the Delhi cloth mills. Then table-mats were introduced here in 1980 by Mr. D.C. Bhatia with the inspiration from a Hungarian lady Mrs. B.K Nehru. This lady was an adviser of M/s Central Cottage Industries Corporation of India. 1985-86: The old second hand power looms were introduced by the machine manufacturers of handloom for making bed covers, curtains and other upholstery clothes. In 1985, M/s Mahajan Overseas introduced Chinddi Durries under the guidance of Mr D.C Bhatia. 1984-90:: The Shoddy Industry introduced blankets manufacturing in Panipat. From the period of 1984- 1990, when terrorist activities were at their peak in Punjab, many of the manufacturers in Panipat started manufacturing blankets. The business of blankets expanded very fast and in due course Panipat became famous for blanket market. A good quantity of blanket was even exported to Japan but later the market of Japan was closed due to a devastating earthquake in 1997. 1990-91: The throws of different designs were manufactured in power-loom. And the hand tufted carpets and handloom carpets were introduced. The shuttle -less looms were introduced by Paliwal export then Mr Kaluram of Liberty Velvets and Mr. Om Bhatia of Loom Drape used them for manufacturing upholstery clothes. PANIPAT HOME MADE- UPS CLUSTER 2 1998: Paper printing began at Panipat and now there are around 20 units in this sector 1999: New kinds of Made ups i.e. with embroidery and embellishments were introduced. This has led to evolution of new products, which is going strong even today. 1.2 THE PRESENT SCENARIO Panipat is today world-famous for its beautiful and jubilant handloom made-ups, blankets and other upholstery. This new fame seems to have superceded the nostalgia of the three historical battles of Panipat. Some important features of the textile industry of Panipat are: • There is hardly any city of this small size in India that has such a big textile -manufacturing base. • Panipat Industry comprises of seven segments i.e. handloom, woollen carpets, shoddy yarn spinning, open end cotton yarn spinning, power-loom industry, wet processing and hosiery woollen yarn industry. All of these together makes a business of around Rs 4000 crores and provide employment to 2 lacs people. • Panipat contributes 50% of the total exports of the Handloom products from the country. • Panipat town has got a global distinction of having the maximum number of shoddy spinning units at one particular place. • Panipat has been awarded Gold Trophy by the Export Promotion Council for the highest quantity of exports in woolen hand tufted carpets, • The industry of Panipat is meeting out 75% demand of Barrack Blankets for the Indian Military. In a nutshell, Panipat is an industry where one can witness a wide range of handloom textiles, whether for a five star hotel or for a poor man's cottage. However, Panipat is not an exception case during these days of overall industry recession. The industries of Panipat are seriously suffering from low capacity utilisation, shrinking margins, overseas competition and changing preferences of consumers, which is resulting in close down of factories. In view of above there is an urgent need for a need based, flexible, focused and action oriented programme targeted at sustained development of the industry. 1.3 ABOUT THE CITY Panipat, a historical city of India is located about 92 kilometers away from Delhi on the National Highway No1. Panipat as an independent district was formed in January 1992 out of old district of Karnal. The city of Panipat spreads in a diameter of about 8 kilometers and has a population of about 4.5 lacs. At present Panipat is known as the city of handloom, which is why most of its people are directly or indirectly related to the textile business. Climate: A perennial river Yamuna touches the outskirts of the district in east, which forms the dividing line between Haryana and Utter Pradesh. The climate being continental type is very hot in summers and very cold in winters, with coldest and the hottest month being January and June respectively. Most of the annual downpour occurs in the quarter July- September. The remaining months are almost dry except a brief spell of showers in December and January, due to the North East Winds. PANIPAT HOME MADE- UPS CLUSTER 3 Infrastructure: • Railway: Panipat is well connected to the national capital, Delhi as well as with districts of Karnal, Kurushetra and Ambala, with electrified railway lines. It also has a broad gauged railway line with Rohtak and Jind. • Road: Panipat is situated on the Grand Trunk road No1. It is also connected to the surrounding districts through state highways. Every sector in the city is connected well to the main city. However, the conditions of the roads are not up to the mark. • Water: The main source of water for Panipat is ground water, which is generally of good quality. However, ground water is getting polluted day by day in some areas due to contamination of chemicals used in dyeing and printing units. The sewerage and drainage system is not proper in many parts of the city. • Electricity: The electricity supply is not regular and there is a high rate of power-cuts during daytime. This is one of the major problems and so the use of generator sets has almost become mandatory for industries. • Banking: There is a large number of commercial and cooperative banks in the city that provide credit facilities to the entrepreneurs. However the major industrial development banks like IDBI, SIDBI and IFCI do not have any branches in Panipat. • Industrial Area: The industries are presently unorganised and scattered all around the city. However the major industrial sectors are old industrial area, Sector-25, Sector-29 and new industrial sector-7 and 8. But these sectors are not well equipped in terms of facilities. • Container Depot: Panipat has got a container depot in Babailpur but the depot is being under- utilized. This is because most of the exporting firms prefer to load their goods from Delhi.13 2. THE PRODUCTTION DETAILS 2.1 SKETCH OF THE SMES IN THE CLUSTER Handloom: There has been a steady growth in the handloom sector of Panipat during the last 15 years. At present, there are more than 25000 handlooms working in the district providing employment to about 40000 people. A majority of the weavers are migrants from U.P, Bihar and West Bengal. There are some local weavers also who have come from the neighboring villages to work in the handloom units of Panipat. These weavers are employed on a contractual wages/piece rate system and the average earning per worker is around Rs70 to 120 per day, depending upon the width and the type of cloth produced. There are mainly three types of looms, which are used for producing different varieties of cloth, given as under: PANIPAT HOME MADE- UPS CLUSTER 4 TYPE OF LOOMS PRODUCTS Frame Looms For making plain as well as striped cloth Jacquard Looms For producing cloth of different designs Pit Looms For manufacturing heavy weight fabric of small size and short length i.e. durries etc. The raw material for handloom is adequately and easily available locally as there are a number of cotton/woollen spinning mills in the district. Only synthetic yarn needs to be supplied to the handloom sector through commission agents or distributors. There is demand of traditional Handloom products in the International Market, which is helping to keep this sector dynamically alive. Power-loom: The Power-loom sector is the largest amongst all with a share of approximately 85%. Most of the power- looms are attached with Jacquard for creating a wide range of designs on bed covers, curtains, upholstery, blankets etc. There is also an addition of 900 new and second hand shuttle -less looms in this sector to sustain the market competition. However, the present condition of this sector is not appreciable. The power-loom products are mainly for the domestic market. Art silk, polyester, acrylic and polypropylene, and shoddy yarn are the main raw materials of this sector. The Shoddy yarn is available from the local Shoddy spinning units and the synthetic yarns are sourced through local traders. Carpet Industry: It is a labour oriented industry and workers from nearby villages come to Panipat to work in the carpet units. A worker earns Rs70 to Rs90 per day. There are mainly two types of carpets manufactured in Panipat, which are Hand tufted carpet and Hand loom carpet. The hand tufted carpets of the district stand at the top position in the overall carpet production in India. Panipat is also famous for its woollen tufted carpet and it even caters to the international market. The raw material for this is sourced from New Zealand, Bikaner, Jodhpur and Jammu & Kashmir. Shoddy & Woollen Industry: The shoddy industry has picked up sharply in Panipat during the last 15 years. There are about 342 units of shoddy yarn and woolen industries here, which cater to weaving units of Panipat, Amritsar, Bikaner, Bhadoi. The mutilated rags that are used as raw material in this industry are imported from the European countries. The cheap blankets produced out of these have replaced the previously used thick cotton fabric i.e. Khese. The woollen yarn manufactured is used in hosiery and carpet industry. However, this sector at present is not doing well because of recession in the blanket industry. PANIPAT HOME MADE- UPS CLUSTER 5 Open End Rotor Spinning: There are about 45 open-end spinning units in Panipat. This sector caters the needs of weavers of handloom & power loom units of Panipat, U.P and Rajasthan. Mainly 'desi' and 'J-34' cotton is used as a raw material in these units. A unique feature of this type of spinning is that it uses upto 85% of waste cotton to spin cotton yarn. The cotton yarn so produced is used in manufacturing mainly exportable items of handloom. Processing Units: There are about 150 dyeing and printing units, and about 35 finishing units in the district to meet out the requirement of the local textile industry. Most of the units are equipped with locally made yarn, hand hank, dyeing m/c or cabinet dyeing m/c. But the quality of dyeing is still a drawback in these units. 2.2 PRODUCT CATEGORIES Even though the products of Panipat are non-apparel and basic house hold articles yet there is a clear distinction between the domestic market and the export market products. • List of products for domestic markets: 1. Bed covers of screen printed, paper printed, jacquard designed etc 2. Blankets of acrylic, shoddy, woolen may be milled, semi milled or non-milled. 3. Curtains with Jacquard designs- may be made of polypropylene, polyester etc. 4. Upholstery made of polyester, rayon or cotton velvet etc 5. 'Durries' made of waste cotton yarn Besides the above there are other products like bed sheet, Khes, velvets, carpets, barracks blankets, door mats, mink blankets and handicraft items like furnishing fabrics, terry towel and heavy drilled fabrics, woolen uniforms etc. • List of products for export markets: (Importance-wise) 1. Durries, rags, rag-rugs, throws, Rajput bed covers 2. Blankets 3. Carpets 4. Door mats, pedestrian mat, bath rugs, cushion covers, Table linen bath robe, bib, table napkins, table cloth, mats, dish towel, bed sheets, kitchen towel, hand towel, bath towel, terry towel, beach towel, home furnishing, wall hangings, drape, shower curtains PANIPAT HOME MADE- UPS CLUSTER 6 • Products in terms of Dye -types 1. Fabric dyed Products -Rajput bed covers, Fine Curtains, Table covers, Khes etc 2. Yarn dyed products - Throws, Bat mats, Place mat, Durries, foot mats etc. 2.3 OTHER CHARACTERISTICS OF PANIPAT MADE UP'S • Most of the products are for higher income group. • Most of the products are high-value added and fully handmade i.e. low technology based. • Even though the products are non apparel and non seasonal, they are fashionable products • Products are customised and at the same time cost competitive. • Most of the products are thick & made of coarse count & more number of plies • Products are easy to maintain and durable. • 99% of products are cotton base and other 5% are of jute, viscose, wool etc • Some products also go in natural and bleached forms. • Products are designed based with attractive colours and structural designs, i.e. with different counts, weaves and motifs. • Products are weft way designed, embodied or may be loom tufted or looped. PANIPAT HOME MADE- UPS CLUSTER 7 2.4 PROCESS FLOW CHART Raw material (Cotton Fibre) Spinning to different count & Yarn Dyeing Ply as per requirement 20% 80% Warping on Sectional Pirn Winding Warping M/C Hand Charkha Waving on Pit loom/Frame Loom Inspection Wet processing Scouring, Bleaching, Dyeing, Printing, Finishing as per requirement Inspection Hemming/knotting/Embroidery/Tufting Inspection Packing & Dispatching PANIPAT HOME MADE- UPS CLUSTER 8 3. ASSESSMENT OF OTHER INSTITUTIONS IN THE CLUSTER & THEIR LINKAGES 3.1 TECHNICAL SERVICE PROVIDERS a) Textiles Committee: The services rendered by the regional office of Textiles Committee Panipat, a statutory body under the Ministry of Textiles are as under: • Inspection of handloom goods meant for exports for issuance of certificates under various bilateral agreements such as ISO 9000, ISO 14000, SA 8000 • Consultancy services • Training to quality checkers • Quality appraisal of Textiles • Market survey • A collection center for other kinds of testing (Eco-Testing, Quality Testing) to be done at its various ultramodern laboratories b) NITRA: The services rendered by the regional office of NITRA, Panipat are: • Providing short term training to unskilled weavers, operators, jobbers and supervisors • Training for weaving dobby, jacquard designs • Consultancy for developing new designs in dobby and jacquard • Training for Computer Aided Textile Designs (CATD) • Training for physical and chemical testing of fibre, yarn fabric, dyes, chemical etc • Consultancy for ISO 9000, energy conservation and effluent treatment • Consultancy in other areas of spinning, weaving and processing c) Weavers Service Centre : The services offered by R. O. of WSC are as under: • Conducting short term courses on handloom weaving, designing, dyeing & printing • Consultancy on designs, weaving, dyeing and printing • Holding exhibition of eco friendly dyes and dyeing d) District Industries Centre : The services offered by the office of District Industries Centre are: • Issue of permits/endorsement to power-loom units (registration) • Helping in the Prime Minister Rozgar Yojana • Survey/Inspection of units • Non- repayment pursuance PANIPAT HOME MADE- UPS CLUSTER 9 e) Quality Marking Center: It is a laboratory under state Government that provides some textile testing facilities with limited and conventional instruments. f) NHDC: It is a central Government body, which supplies yarn, chemicals and dyes to manufacturer at mill rate and also promotes awareness about eco-friendly dyes. The organisation helps in handloom fabric marketing through the All India Handloom Apex Association, Handloom Co operative Society etc g) Other Training Institute: There are three Industrial training institutes in the Panipat district. These institutes provide technical and vocational trainings in diverse occupations such as, electrician, fitter, mechanist, welder, carpenter, carpet weaving, cutting and tailoring etc. h) S.G.S India: An international inspection, testing and consultancy agency, which has their ISO consultancy and sample collection center in Panipat. i) CATD Centres: There are as many as 12 to 15 CATD centres existing in Panipat, which develop and supply designs to the manufacturers of jacquard and dobby weaving units. However, most of them have not been able to perform satisfactorily due to reasons like non-secrecy maintenance in designs and low knowledge of customer's taste and market trends. 3.2 INTER-SECTORAL LINKAGES BACKWARD LINKAGES KEY ACTORS FORWARD LINKAGES Yarn Suppliers Spinning Mill, Traders Container depot Handloom & other accessories Fabric manufacturer Market broker, Merchants Wet Processing m/c, Inspection, Dyers & finishers Effluents Treatment Embroidery machines, Sewing machines & accessories suppliers Sub contractors Retailers, Wholesalers & Distributors Computer, Bar code reader, wash care instruction, packing material suppliers e.g. poly bags, cartoons, Jute bags Packaging & documentation Chhindi collector Building Construction material suppliers Constructor Transportation Other service providers i.e. TC, WSC, NITRA, DIC Labour, repairers 3.3 THE CLUSTER MAP Following is a diagram depicting the various linkages operating in the cluster. PANIPAT HOME MADE- UPS CLUSTER 10 CLUSTER MAP OF PANIPAT MADE-UP INDUSTRIES Composite Units PANIPAT HOME MADE- UPS CLUSTER 11 4. SWOT ANALYSIS OF THE PANIPAT MADE-UPS CLUSTER STRENGTHS • Good communication facilities like e-mail, cello phone, courier etc • Strong marketing sense and creative abilities • Temporary but skilled and disciplined work force • Most of the products are complete, finished and value added • Some of the manufacturers are also direct exporters • Panipat enjoys all advantages of a metro city being a satellite city to Delhi • All types of technology are easily made available • Most of the owners are themselves managers, entrepreneurs and designers • Most of the products are of coarse count and multiply of weft. Due to this reason the output per weaver can be maintained as profit, and selling on weight basis highly beneficial. • Most of the big and medium manufacturers attend fairs and shows • Raw materials, machines, spares etc are available locally at reasonable cost • Export and local product lines are different so there is less competition within the cluster • As units are small so low overheads and better controls of manpower and inventory is possible. • Adaptation of products as per technology suitability is the greatest strength WEAKNESSES • Low levels of Productivity • Low technology upgradation • Industries are not organised & are scattered all around the city • City infrastructure not up to the mark • Low quality manual hand dyeing procedures • No market research leading to lack of knowledge about customer's taste • Lack of designing and R&D Institute for made ups • Associations are not proactive • Sales are mainly done on credit basis upto 90 days which adds to the cost • No branding of products so products are being sold as commodity • Fluctuation in yarn prices • Unhealthy internal competition OPPORTUNITIES • With the advent of new functional fibres and better finishing, there's a wide scope for product diversification • Opportunity for expanding business with new range of made ups • Scope for higher capacity utilisation for meeting big and small orders PANIPAT HOME MADE- UPS CLUSTER 12 • Creating branded products for higher profit margin • Huge scope of increasing market share in Asian countries THREATS • Products are not so high-tech so more competition can enter the market easily • Abolition of handloom benefits may have great impact on exports • Delhi based apparel manufacturers are entering to made-ups due to reducing scope in apparel • Competition from China and Pakistan • Newly developed synthetic fibres to meet specific end use • Ever-changing customer preferences 5. EVALUATION OF THE CLUSTER'S ORGANISATION AND PERFORMANCE The success story of Panipat is not only due to its historical background in handloom weaving but also due to the entrepreneurial attitude of its people. The factors like time to time product diversification, increasing value addition, vertically and horizontally networking and expansion according to market needs have helped in popularising the cluster’s products in different other parts of the country. Panipat presently exports 80% of its products to USA & UK, and other 20% to Spain, Germany, Japan, Sweden and Caribbean region etc. Proactive marketing by utilising opportunities like trade-fairs and shows in huge numbers, preparing product catalogues and folders for showing samples to overseas buyers etc has helped the industry to establish itself in the world markets. A few big and medium industries are also supplying products to giant global departmental chains like IKEA. Many of them usually get their manufacturing done by subcontracting with small manufacturers, while they themselves concentrate on tasks like sample preparations, product presentations and networking with their customers. Most of the firms in the cluster feel that their main competitors are present in the local industry itself. They are not threatened by other clusters such as Karur, Kannanoor or even China and Pakistan. This shows the self-confidence in the local entrepreneurs, which helps them face all kinds of challenges boldly. MAIN REASONS FOR PANIPAT’S SUCCESS • Value added complete products • Orientation of product line as per the suitability of technology • Low cost of manufacturing & more profit margins due to luxury items. • Requirement of less number of quality parameters is an added advantage • Wet processing cycle is short and no essential demand for any special finishing • People are bold and have an entrepreneurial bent PANIPAT HOME MADE- UPS CLUSTER 13 • Time to time addition of new products to the market basket as per the customer's changing tastes. • Products are unique and competition is less as compared to apparels and other items. • Strong historical background of being a weaver’s city with an ample supply of skilled craftsmen. • Maximum stress on new designing as it is identified as the key driver of markets. • Strong raw material base available easily and locally in wide range. • Separate product lines for domestic vis-à-vis export markets. This helps in cutting on internal competition and over production. • Scientific processes that help in catering to customised orders of even smaller quantities. 6. VISION FOR THE CLUSTER "The cluster aspires to be a substantial and sustainable cluster by 2005." The vision demands to build up a clean image and constant addition of new range of quality products with high value addition, in order to create a good cluster profile for brand promotion, whereby it can increase the percentage of share in traditional and new potential markets of the world. PANIPAT HOME MADE- UPS CLUSTER 14 7. PROPOSED ACTION PLAN FOR THE CLUSTER SL. NO. ACTIVITY OBJECTIVES QUARTER MAN DAYS CDA Budget (Rs.)** CDP Budget (Rs.) ACTORS/BDS 1. Dissemination & validation of primary & secondary data review & benchmarking Common vision building Q1 30 7,500/- 10,000/- Self 2. Conduct seminars, on made- ups, SA, WTO, IT Awareness, Trust Building & Kick Start Q1, Q2 60 15,000/- 90,000/- Textiles Committee IIP IT Consultant 3. Workshop on: Efficient Financial Management & Common Business Plans &Networks Common Business Plans & Network Formation Q2 15 3,750/- 60,000/- EDI Freelance Consultant 4. Implementation of service & Packaging Techniques Web site creation, SCM, customer service Q2, Q3 30 7500/- 2,50,000 IT consultant Textile Committee IIP 5. Work shop on Product Diversification Value addition, new product dev. Q4 15 3,750/- 50,000/- Textiles Committee NIFT,IITD 6. New product Sample Preparation. Training for new technology & techniques Q5 15 3,750/- 50,000/- As above PANIPAT HOME MADE- UPS CLUSTER 15 7. Attending Fair & shows Dynamic clusters To occupy prime importance place Q6,Q7 30 7,500/- 1,00,000/- Textiles Committee TEXPROCIL FICCI 8. Exposure visit to Karur & Cannanore Understanding the competitors edge Q7 15 3,750/- 50,000/- Textiles Committee 9. Implementation of quality & Management system (ISO, SA) Building up of cluster profile Q8, Q9 30 7,500/- 5,00,000/- Textiles Committee 10. Upgradation of technology & techniques Improving dyeing techniques & value addition Q9 30 7,500/- 1,00,000/- Textiles Committee 11. Marketing Consortium Increase economy of scale Q10 15 3,750 1,00,000/- Textiles 12. Common Brand Building Do Q11 60 15,000/- 1,00,00,000/- Freelance Consultant 13. Exit Policy Making the cluster work Independently Q12 15 3,750/- Local Institutes & Organisations Note: The action plan is subjected to in depth study and changes ** CDA Budget is calculated at the rate of Rs.250/