Denim 2006

By  : Dr. Chandan Chatterjee

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Why Denim

Todays consumers like to live with more casual, relaxed and yet, sophisticated. With the emphasis on
casual life styles, fabrics, therefore, must not only provide just comfort and beauty, but also have the
stamina to stand up to the rigors of daily life. So, is the Denim Jeans, growing as one of the fastest
Apparel product both in the developed and developing world. It is strong, versatile, wears well and gets
softer and comfortable with the time. Today, denim has also gone from being a work wear look to a hot
fashion commodity.
 
Denim-In Quota Free Regime

Indian Textile industry has passed through the long discussed quota free regime for more than a year.
Many units have started becoming more and more competitive with new technology, new ideas and
product and are in the process of expansion either in fabric, made-up or in fashionable garment. New
projects are coming for manufacturing Cotton yarn either to feed sudden domestic requirement or to
Export. Possibly, only and one international class Machinery manufacturer of the country, Laxmi
Machine Works, indicates their delivery schedule of Spinning machinery at least 2 years from now due
to over booking. On the other hand, Technology Up gradation Scheme (TUFs) does not support import
of 2nd hand Spinning Machinery.

Even then there is a constant flow of imported machinery in all most all sectors in Textile. Recent study
by FICCI, titled Ending of MFA and the Indian Textile Industry , based on responses received from 60
medium and large textile planners across the country, reveals that 83% of them are planning for new
investment in next few months. With this growing trend many are predominantly looking at Denim as
major raw material required, for the growth of fashionable Garment in the country and world. Many
existing players in Textile have, therefore, initiated their expansion programme with manufacturing
Denim, once again; with a fresh look especially when country is strong in producing right kind of cotton
required for this industry. In the year 2006 and after one year of Quota free regime, a need is, therefore,
felt to rethink and relocate this eternally young fabric for clothing in the textile & fashion world.

The Past And Present

The word Denim is derived from the French Phrase The serge de Nimes, a serge fabric (A durable
twilled originally worsted fabric) from the town of Nimes in France. It is also said that the word Denim
came from a worsted fabric known as Nim in France during 17 th century. Interestingly, another fabric
known as Jean also existed at that time. This fabric was basically a fustain, a dark twill cotton cloth.
Possibly, only major difference of these two fabrics is: Denim was made of one coloured thread and one
white thread (warp & weft) whereas Jeans was woven with two threads of different colour. The word,
Jeans comes from a kind of material that was made in Europe. So, Denim is also called as Blue Jeans.
Finally, Denim was used as work cotton clothes when both durability and comfort were needed probably
in the 18th century and it is marked as one of the oldest fabrics, yet Denim is never out of style,
remaining eternally young.

The Denim craze began as far back as in 1949, during the American Gold Rush. There was a little
recession in 1990 in the world Denim market, yet it has reinvented its position in 2000. Today in 2006
India would be the 2nd largest supplier of Denim after China. In India, Arvind Mills in Ahmedabad first
manufactured Denim some time in the year 1986. With modernisation acquiring a quicker pace in India,
today Denim has become one of the most popular wear among young girls and boys.
World scenario of Denim in 2006 has taken different shape and size.. United State, the largest producer
of Denim till late nineties have almost closed down and supplier base has shifted primarily in China,
India, Bangladesh and Shri lanka. Whole Asia now accounts over 50% of World Denim Capacity.
Among these 4 countries Bangladesh and Shri lanka have the advantage of low labour cost where as
China and India have the lower cost advantage both in labour and raw material (Cotton) besides having
the strong base in Textile for last many years. India is facing also robust demand for the domestic
market. Some of the leading players and their estimated expansion programme may be worked as
under-

Major Denim Players in India

In Million Meters/annum

Present Proposed Total by early

Company Capacity Expansion 2007
Arvind 120 - 120
Raymonds 20 20 40
Arvee Denims 45 9 54
KG Denim 24 6 30
Malwa Industries 15 5 20
Ashima 10 - 10
Suryalaxmi 20 20 40
Century 10 10 20
Bhaskar Denim 12 12 24
Rainbow 18 - 18
Mafatlal 10 - 10
Modern 17 13 30
Soma Textile 7.50 10.50 18
Nahar Exports - 20 20
Nandan Exim 10 10 20

Removal of quota restrictions and growing consumption in Asian economies due to fashion craze could
possibly make this significant growth. Even in 2003-04 global consumption in Denim has shown a
growth of 3-4%. Where as domestic demand in India during the same period was estimated at around
10-12%. Sales volume of domestic players was up by 16.5% and realisation by 4.3 %. Besides the
organised sectors many unorganised Denim manufacturers have entered the market for domestic
requirement. As per estimation, world consumption of Denim is around 4,500 Million meters and
demand is expected to grow at about 5-6 %. Besides China, expected major expansions of Denim
Capacity by some other countries are Bangladesh-40Mn Meters, Pakistan-60 Mn Meters and Turkey-
60 Mn Meters. By the year 2007 India is expected to reach its capacity of 360 Million Meters from 288
Million Meters from now.

In Million Meters
 

As on Expected by
Denim Early
March 2005
2007
Total Capacity 288 360
Actual Production 235 360
Domestic Consumption and supply to
Garment Exporters in India

142 236
Total Export 91.5 124
Total World Consumption 4,500

Gujarat is the leading textile state for manufacturing Denim fabric in the country and Ahmedabad is
placed as Denim City in the world.

Quality and Product

Traditionally, Denim is defined as a 3/1 warp faced twill fabric made from cotton open-end yarn of dyed
warp and un-dyed weft. Although some of the denim are also being produced out of ring spun and soft
yarn. It was dyed with indigo blue dye originally obtained from natural sources, but now manufactured
chemically in place of commonly used indigo. Sulphur and a few other colours are also used. While
most denim remains blue, a growing market for other colours has also developed. So, it could go even
to pink, green, yellow, white, light blue etc. Most denim is still 100 percent cotton, although a relatively
small volume of polyester/cotton denim is produced and traded worldwide.  Some new developments
are tensile denim, stretch denim, chinos, polyester blends, tinted denim, raven denim, crosshatch denim
and many others. Today, it has become affordable, comfortable, and durable and offers variety of style
and colour. The utility of denims has increased with different weights 16, 14, 13, 12, 6 and 4 ozs/sq.
yard with different after treatments or washes like Stone wash, bleach wash, hand wash, acid wash,
over dyed, printed denims and even embossed and embroidered denims. 

 Trend

The utility of Denim has increased with different weights, type, colours and different after treatment or
washes both for apparel and non-apparel use. In the world market, classic Denim Jeans retain an 10%
share of the womens outwear market and a 25% share of the mens wear market. The greatest demand
comes from 15 to 19 age groups. It is expected that the growth rate for denims would be directly
proportional to the growth rate of readymade garments industry in India and abroad.
In India, the denim fabrics are most used by the youths in the age group of 18 to 25 mostly in metros
and "B" class cities. However there is a phenomenal scope for consumption by tapping rural areas and
already it has started with a significant growth rate. This trend will continue further and essentially it has
increased the domestic demand to a great extent. 

Apart from the youth, denim fabrics are used in children wear also. The raggedness of denim fabrics
has already appealed the local ready made garment manufacturers to use denim fabrics for children
wear. Further scope of increased usage of denims in children garments is also anticipated.   Though
denims used in the ladies jeans presently limited to only ladies belonging to upper strata in Metros, the
ladies garment sector is the upcoming target among Indian denim manufacturers.

Today, there are over 500 units; manufacturing the denim wears specially jeans etc. by using their own
brand name and logos. Leading brand names in the market are Wrangler, , Benetton, Numero, Uno,
Jean Junction, Avis, FU Bata (North Star), Pepe, Jealous, Naked, Moody Blues, Upper Class etc. It is
understood that with the phase out of quota from the last one year International Casual Wear Brand like,
Pepe Jeans International alone is expected to source from India more than double than existing of 10%
of Global Business from India. Pepe`s business consists 45% jeans and 55% fashion Denim of which
Women wear is around 35% of total sourcing. Similarly, Denim Apparel vendor, Levi Strauss is creating
over 100 exclusive stores in coming years from existing 50stores in India. The Hong Kong based
popular denim wear brand Giordano and many others are entering for outsourcing from India. Many of
the International Buyers from China and Shri lanka are looking at India for this enormous growth in
quality and quantity in this area. This trend is expected to continue for another few years for Denim
industry in India. Many of existing players are extending their activities in Hi-fashionable Garments.

Technology

Selection of technology has got a vital role to play in deciding required product mix and competitiveness
and that too in the global context. The yarn mostly preferred for making denim is open-end spun yarn,
which is twisted harder than that of ring spun. Therefore, it is harder for the indigo dyestuff to penetrate
during dyeing. This will well suit for denim. The required raw material for denim cloth manufacturing will
be spun 6s to 12s 100% cotton (open end), for which short staple cotton is sufficiently available in the
country. With a new look, feel and style, many are also producing ring-spun denim in a non-
conventional way, besides development with fancy yarn and finish. Indigo Dye Stuff and synthetic dye
stuff of good quality may be imported to get cost advantage still further. Indigo has a low affinity for
cotton; deep blue dyeing is only obtained when dyeing and oxidation are repeated several times. Then
rinsing takes place and from the accumulator, warp yarn goes for usual sizing and then for weaving.

The Rope Dyeing system is the most preferred method by the majority of "World Class" indigo dyers. It
offers the highest production and assures multiple warps set range with consistent shade for two or
three warp sets as they are processed simultaneously. However, this technology is more capital
intensive. Plant and machinery includes warping machine, dyeing and sizing machine, foam finishing,
looms, singeing and raising machine. Sizing and dyeing and finishing machines are mostly imported as
on now. However, singeing, raising and other finishing machine may be procured indigenously. 

The economic size of denim plant in India is around 10.0 million meters per
annum capacity of production with an investment ranging from Rs. 800-
1000 Million. This amount varies depending on type and source of
technology. Cost of project will be still higher with Ring spinning and other
parameters in the sequence of process.

Out Look

In India Production of Denim Fabric (cotton) has gone up to 235 mn. meters in the year 2004-05 from
only 74.94 mn.sq.mt. during 1998-99 in the country. Export has gone up to 91.50 Million meters during
the said period besides supplying the fabric to Garment Exporters. 100% non-cotton and blended denim
are available in the market with an estimated size of 10 to 15 million meters.

Denim fabrics are used as jeans trousers both for men and ladies. It is extensively used in the world as
casual garments, shirts, jackets and children wear. Its versatility, finds applications in furniture
upholstery, bed covers, curtains, etc. Denim is no longer a cotton only product. It is now mixed with
Jute, linen, hemp, wool, lycra, polyester and others. Sometime this may be with 100% Nylon net
bonding, two way stretch and special coating for rubberised effects. It can not be restricted with
traditional blue pigment from natural indigo dye but with verities of synthetic colours with different look
and wash.

In coming years, for the domestic market too, India will be a major consumer of denims with a
population of over 1080 million due to rapid exposure to new culture and trends. The per capita
consumption of denim fabrics in India is bound to go up from the existing 0.1 meter as against 0.6 meter
of world average or 0.04 jeans per head against 2 pairs in the U.S. 

It is eminent that India and, in specific, state like Gujarat is having the competitive advantage for
manufacturing denim fabric in the world mainly due to availability of abundant raw material and well
established textile and chemical processing base. As per International Production Cost Comparison-
2003, per yard of open end woven fabric cost in India comes to US$ 0.614 as against 0.647 in China,
0.600 in Brazil, 0.696 in Korea, 0.675 in Turkey, 0.746 in USA and 0.953 in Italy. Union Textile Ministry
has also made a target of US$ 25 billion garments export by 2010 from the present export of US$ 6
billion in the year 2004.

International Buyers like JC Penny, Tommy Hilfiger, Gap, Wal-Mart have already established their
offices in India and started outsourcing extensively from India, which in turn, will further boost to Indian
Denim Industry in the years to come. But many of them are expecting if a fabric maker can supply
garments too. Today, India exports over 60% of the output of Denim fabric. But our competitors are
China, Pakistan, Turkey and Mexico. Chinas USP is only on low price. Therefore, India should focus on
customers who are ready to pay price for quality. But our lead-time to reach Buyers needs to be
improved substantially. In the emerging fast changing situation and with ending MFA, this industry,
however, needs to understand our strong textile base and capability, along with, fast changing
consumer trends, styles, tastes and new application and finally the cost competitiveness as a
continuous effort towards success.

Wrangler Girl’ for Indian market

Wrangler India is launching a new sub-brand ‘Wrangler Girl’ .This brand shall be specificially
targetted at young women.
Wrangler has mainly been a male focused brand, though internationally they also have a brand
for middle aged women – ‘Wrangler Aura’.

Why did Wrangler feel the need to bring out this brand in India ?

In India, there are hardly any good female denim brands. Most of the brands are focused on
Males and female denim demand has been largely met by the unbranded players. I have
scoured many shops to find a good female denim brand, but most of them out there seem to
have made half hearted attempts.The reasons are not far to seek. The Indian females like too
much of embellishments and like in other markets, the designs go out of favour very
soon..Therefore the branded players find it difficult to cater properly to this segment of market..
However,the fact that the number of working women is rising and the offices are relaxing their
dressing rules to allow denims, a good market potential has generated.. These women are
looking for elegant ,feminine looks (without getting flashy) andWrangler seeks to tap this
potential through “Wrangler Girl’.The price range is Rs 1200 and above – upto Rs 3000..
Wrangler seeks to target about 25% of its denim turnover from the women segement..

Lets see if they are able to do it.. Designing has never been the strongest point with
Wrangler

October 2, 2007 Posted by denimiscool | Apparel Brands/Retailers - Indian, Indian News on

Denim, Jeanswear Collections - Indian, denim | Leave a Comment

Marketing campaigns by Indian Denim Brands

The premium denim brands in India are launching niche campaigns to push their them
deeper into Indian psyche.

WHY? : Obvious answer is more sales. But the need for various campaigns has also been
accentuated by the fact that various International Brands like Ralph & Lauren, Diesel and GAS
have become more aggresive in India . Another positive factor which is motivating the brands
to invest more in campaigns is that the usage of high-end jeans in India is set to pick up with
more and more offices (particularly in IT & BPO industry) allowing semi-casual wears.

SOME CAMPAIGNS….

WRANGLER – Go Clean – ‘Clean Skin,Clean Bikes,Clean Jeans’ : Clean jeans is

obviously the ‘Clean Look denim ‘ – an effect which is achieved through mercerising the
denims . But why ‘Clean Bikes’ and ‘CLean Skin’ ? Well, Wrangler has tied up with Castrol
and Kaya Skin clinic to together take on the young and hep newly employed crowd of India
who are very concious about their looks..Also Wrangler feels that distressed look is out and
raw rinse look is in..
LEE: The tagline for the campaign ‘HISTORY ROCKS’ AND ‘LEE SKINNY‘ is ‘Not for
the masses” sends a clear message. These jeans are for upwardly mobile only who want to
look apart from the crowd..
LEVIS” ‘SAY NO TO PLASTICS’ – This campaign of Levi’s is targeted to bring the
attention of the consumers on the Red Loop of Levi’s. Also, it means that they are looking at
consumers with some attitude who want to be seen as proactive in environmental
conciousness.. Though Levi’s claims to have a good response after the campaign, I have my
doubts over the efficacy of such campaigns in India..

Others in the line include Flying Machine’s ‘CREATIVE CULT‘ campaign . As I mentioned
before, ‘Flying Machine’ has been relaunched as a high end brand with prices of Rs 1800 & up.

IT & BPO workers have become a formidable (somewhat homogeneous) group of cash rich
young people which various industries are targetting to tap in their own way. So Denim
Industry was not expected to remain behind such ideas come to even our politicians(CPM) who
want to unionise this group!!!!!

June 18, 2007 Posted by denimiscool | Apparel Brands/Retailers - Indian, Indian News on
Denim, Jeanswear Collections - Indian, jeans | 2 Comments

VF to push value denimwear in India through  retailers

VF Corp., through its JV VF-Arvind Brands,wants to be a major player in the value jeans
segment in India through its value brands like Hero and Riders . To this end, it is aiming to tie
up with the various important retailers in India including Wal-Mart .
VF had been more focused on the premium segment of the market through its brands –
Wrangler and Lee – but realised the importance of the value segment . Its main competitor –
Levi Strauss – had also realised the same and sold its Signature brand through Wal-Mart
(among other retailers).

As Reported by Economic Times , the total size of the Jeans market in India is about 40-45
million pairs of denim and out of which 44 million pairs are in the value segment(Less than Rs
1000).
Though I agree with the % of value segment , I feel that the total size of the market of Jeans in
India is much bigger. Denim, which used to be mainly an export item, is currently mainly a
product for domestic sale (apart from some sale to garment exporters).
I am running out of time and will write more about this shortly.

April 24, 2007 Posted by denimiscool | Indian News on Denim, Jeanswear Collections - Indian
| Leave a Comment

VF Arvind to have e-commerce retailing

Its good to know that more and more industries/companies are realising the power of the ‘New
Media’ for marketing their products.
Whereas, in countries like US , e-commerce is almost considered a must by most of the
retailers, in India, where the power of the net has yet to be tapped, its potential is being realised
slowly and slowly by the marketers..
It gives a good feeling to know that VF Arvind is planning to go for an e-commerce site for
its ,currently 7, VF brands (besides others like North Face etc which are to be added soon).

Selling established brands through the net is probably the least problematic as the consumers
are aware of the prices , fits ,styles etc .All they need to know is the style and size they like and
its easy to order through the net . It is particularly true for the Indian consumer, who is
notorious for ‘hand feeling’ the products a number of times before purchasing.

However, backup operations and the service support are critical for the success of the e-
commerce project.
The experience of VF Corp would come in handy for Arvind in this regard as they have been
retailing online since a long time..

However, it would be most interesting to see the day when Arvind does retail its own
brands through the net and makes them a success…

April 15, 2007 Posted by denimiscool | Indian News on Denim, Jeanswear Collections - Indian
| Leave a Comment

Raymonds fabrics to be marketed through Reliance  Retail?

Raymonds seems to have concluded talks with Reliance Retail for selling its DENIM
FABRICS through the Reliance Retail Stores. The first of these stores is expected to start in
Ahmedabad shortly.
About 12-15 years ago, denim in India used to be mainly bought by buyers in the form of fabric
and was stitched by the local tailors and then put on by the users . The garment could not get
the Industrial Washing treatment, and the effect was primarily generated by ‘SOAPS AND
SUN’.

I am not really sure whether Raymonds is planning to revive the concept of selling denim in the
form of fabrics again.. If yes, then it remains to be seen how the users -primarily the young
generation- takes it as they are getting used to a variety of washing, embroidery, embellishment
and other effects on their denims.

Personally , I think, it may not be too much useful if there is no additional tools for creating
effects on the denim are given to the users as plain denim is hardly worn these days..

April 7, 2007 Posted by denimiscool | Denim Mills - India, Indian News on Denim | 1
Comment

Gokaldas Images plans to manufacture denim

Till now it was more of forward integration in the Indian Denim Industry with the Denim fabric
players foraying into manufacture and export of Denim Apparel.

Now its the turn of Apparel exporters to look into backward integration and the Apparel Major
– Gokaldas Images(which has strong prescence in the Denim apparel exports) – plans to
bringup their own Denim manufacturing unit within the next fiscal year.

The move makes sense in the fact that they will have captive consumption inhouse for the
fabric. But it needs to be remembered that it will take them some time before they can match
the standards of the fabrics supplied by their current suppliers (many of which are nominated
by the buyers)  .  However, it is not that this kind of backward integration is uncommon.
Apparel exporters have done it before in  countries like Bangladesh,Turkey etc.

The denim producing textile companies of Gujarat, which were hit hard by dipping export
demands, fluctuating currency values and rising price of cotton last year, have reported huge
profits in FY2009-10.

Most of the textile companies, which failed to return good figures last year, thanks to the global
meltdown, have shown good turnaround, returning to profits for the year ended Mar 2010.

Revival in demand from major export markets, including the US and Europe, and control over
the input cost, including power & fuel and interest costs, helped the companies to return
fantastic numbers.

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India's biggest denim producer - Arvind Ltd - with capacity of 90 million meter per year
recorded profits of Rs49.95 crore for the year ended Mar 2010 compared to loss of Rs99.42
crore a year back. Despite sales growth of 18% for year ended Mar 2010, company managed to
save 20% (Rs65 crore) on power and fuel costs.�

"This year, overseas demand for denim increased and simultaneously there was good rise in
domestic demand compared to previous year. So, our net profit jumped by nine folds in 2009-
10 compared to 2008-09," said Ashish Shah, MD, Aarvee Denim & Exports.

Aarvee reported profits of Rs22.97 crore for the year ended Mar 2010 compare to Rs2.32 crore
in the earlier fiscal. Profits of Nandan Exim too witnessed similar jump, which went up nine
folds to Rs11.24 crore from a loss of Rs1.4 crore. Jindal Worldwide Ltd posted profits of
Rs8.83 crore compare to loss of Rs5 lakh for the full year ended Mar 2009.

However, 2010-11 may be difficult for industry. "Despite ban on cotton exports, the prices of
cotton are increasing. Not only Indian cotton but even imported one is becoming costlier day
by day. So, we will have no choice but to increase the denim prices," said Shah and added that
in coming years, company is planning expansion in which it will add 10 million meters of
denim line to its existing capacity of around 60 million metres per annum.

Aarvee Denim is the 2nd biggest producer in India with capacity of 50 million meter per
annum. Gujarat alone, with nine textile companies in the state, produces 10% of the global
denim capacity. Currently, the state's companies produce around 270 million metres of denim
annually and plan to increase it to around 295 to 300 million metres per year in 2010. Arvind,
Nandan Exim and Aarvee Denims are looking at adding capacity in the current fiscal.

"The profits of the textile companies will continue to improve in financial year 2010-11 if
monsoon meets the expectation. Further, cost rationalisation, including of interest cost, has
given a reasonable margin to the denim companies. Looking at the current market scenario,
denim companies are likely to do much better than last year," said Vaibhav Shah, MD,
Monarch Projects & Finmarkets Ltd.