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    Apparel Industry

    by

    Aman Anshu(13PGP061)

    Minu Pandey(13PGP091)

    Puneet Manot(13PGP102)

    Bhavana

    Ziradkar(13PGP118)

    Indian Institute of Management Raipur Page 1

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    Introduction

    The apparel and textile industry occupies a unique and important

    place in India. One of the earliest industries to come into existence in the

    country, the sector accounts for 14% of the total Industrial production,

    conduces to about 30% of the total exports and is the second largestemployment creator after agriculture.

    The Indian textiles industry that already has an overwhelming

    presence in the economic life of the country has been given a further

    boost with the scrapping of quotas in global trade of textiles and clothing.

    In the post quota period, the size of industry has expanded from US$ 37

    billion in 2004-05 to US$ 49 billion in 2006-07. During this period, while

    the domestic market has grown from US$ 23 billion to US$ 30 billion,

    exports have increased from around US$ 14 billion to US$ 19 billion.As a matter of fact, the apparel and textile is the largest foreign

    exchange earning sector in the country. Being the 2nd highest employer of

    raw labour it gives a direct employment provider to over 35 million people

    and with continuing growth momentum, the role of this sector in Indian

    economy is bound to increase.

    Objective

    1. Collection of sample data of readymade garments producing

    companies.

    2. Descriptive analysis of the data

    3. Preparation of contingency tables for producers as per their Net

    Profit Margin and consumers according to segment classification.

    4. Using stratified random sampling technique to obtain a sample from

    which inferences can be made.

    Brief Summary of Data used

    The sources of our data are:

    www.Crisilresearch.com

    www.wazir.in (Annexure)

    We obtained the Net profit margin of 11 companies (for 5 years each),

    dealing with the manufacture of readymade garments from CrisilResearch. The companies are:

    Indian Institute of Management Raipur Page 2

    http://www.crisilresearch.com/http://www.wazir.in/http://www.crisilresearch.com/http://www.wazir.in/
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    S.N. Name of Company

    1 Arvind Ltd.

    2 Bhandari Hosiery Exports Ltd.

    3 Celebrity Fashions Ltd.

    4 Gokaldas Exports Ltd.

    5 Kewal Kiran Clothing Ltd.

    6 Page Industries Ltd.

    7 Provogue(India) Ltd.

    8 Raymond Ltd.

    9 Samtex Fashions Ltd.

    10 Virat Industries Ltd.

    11 Zodiac Clothing Ltd.

    We obtained the contingency table for the consumption of garments

    according to the following three categories Mens Wear, Womens Wear

    and Kids Wear - based on two types of products Branded and Un-branded

    from a report published by Wazir Advisors a statistics for the year 2011.

    Descriptive Summary Population

    The population size N = 5*11=55

    Population data.xlsx

    Attachment 2: Population data

    Descriptives

    Statistic Std. ErrorMean 3.9271 1.04266

    95% Confidence Interval forMean

    LowerBound

    1.8367

    Indian Institute of Management Raipur Page 3

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    UpperBound

    6.0175

    Std. Deviation 7.73256

    Skewness -.467 .322

    (Skewness)/(Std. Error of Skewness) = -1.45109 (which is greater than -2 and

    less than 2).

    Hence we can apply Empirical Rule to obtain ranges of data and density of

    data.

    Range of Data Empirical Rule

    Density

    Density (calculated from

    Population)Min Maximum

    -3.81 11.66 90% 67%

    -11.54 19.40 95% 95%-19.27 27.12 99% 98%

    Inference: 95% chances that a selected period has a net profit margin in

    between -11.84 and 19.40

    The histogram plot for the population data:

    Using Tests of Normality Kolmogorov-Smirnov Test

    Net Profit Margin

    Kolmogorov-Smirnova Shapiro-Wilk

    Statistic df Sig. Statistic df Sig..101 55 .200* .980 55 .472Ho: The Population is Normal (p> )

    H1: The Population is not normal (p< )

    Here, significant value p= 0.2 Level of significance = 0.05 (95%

    confidence level) As p > : Null Hypothesis (Ho) that population

    is normally distributed is accepted.

    Probability Contingency Table for Net Profit

    MarginThe mean of the population of yearly Net Profit Margins is 3.9271%

    Using this we create a contingency table for mutually exclusive and collectively

    exhaustive criteria

    a) NPM>5 b) NPM

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    Count Contingency Table

    NPM>Mean

    NPMMean

    NPMMean

    MarginalProbabilit JointProbabil Conditional RevisedProbability

    Indian Institute of Management Raipur Page 5

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    y ityProbability

    Arvind Ltd. 0.09091 0.05455 0.00496 0.10714Bhandari HosieryExports Ltd. 0.09091 0.00000 0.00000 0.00000

    Celebrity Fashions Ltd. 0.09091 0.00000 0.00000 0.00000Gokaldas Exports Ltd. 0.09091 0.01818 0.00165 0.03571Kewal Kiran ClothingLtd. 0.09091 0.09091 0.00826 0.17857Page Industries Ltd. 0.09091 0.09091 0.00826 0.17857Provogue(India) Ltd. 0.09091 0.09091 0.00826 0.17857Raymond Ltd. 0.09091 0.00000 0.00000 0.00000Samtex Fashions Ltd. 0.09091 0.00000 0.00000 0.00000Virat Industries Ltd. 0.09091 0.09091 0.00826 0.17857Zodiac Clothing Ltd. 0.09091 0.07273 0.00661 0.14286

    Total 0.04628 1.00000

    NPM

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    Virat Industries Ltd. 0.09091 0.00000 0.00000 0.00000Zodiac Clothing Ltd. 0.09091 0.01818 0.00165 0.03704

    Total 0.04463 1.00000

    The Contingency calculation can be found in the attached excel sheet:

    contingency tablewith pie.xlsx

    Sampling Technique

    Population consisted of all the companies of the textile and apparel

    industry.

    The parameter taken into consideration was the net profit of all these

    companies.

    We could identify data of each company as strata. Random samples

    were taken from each stratum.

    Stratified Random Sampling has been used for normalization of the

    data with net profit of the samples as statistics.

    Stratified randomsample.xlsx

    Attachment 1: Stratified random sample

    Descriptive Summary Sample

    The sample size selected is n =3*11=33

    Indian Institute of Management Raipur Page 7

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    DescriptiveSample NPM

    Statistic Std. Error

    Mean 4.3021 1.39947

    95% Confidence Interval for

    Mean

    Lower Bound 1.4515

    Upper Bound 7.1527

    Std. Deviation 8.03932

    Skewness -.648 .409

    Tests of Normality

    Kolmogorov-Smirnova Shapiro-Wilk

    Statistic df Sig. Statistic df Sig.

    SampleNPM .106 33 .200* .970 33 .489

    Here, significant value p= 0.2

    Level of significance Alpha (a) = 0.05 (95% confidence level)As p > Alpha (a) - Null Hypothesis (Ho) that population is normally

    distributed is accepted.

    Hence t-sample test and Z tests can be carried out for the sample. From the data it can be assumed that:

    o Case 1 H0: the net profit margin (population mean

    ()) 5

    Indian Institute of Management Raipur Page 8

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    H1: the net profit margin (population mean

    ()) < 5

    o Case 2 H0: the net profit margin (population mean ())

    3.92

    H1: the net profit margin (population mean ()) ,

    Hence we may accept Ho

    Asthe probability does not lie within the rejection ratio, Ho is accepted.

    Hence, with 95% confidence, we can say the net profit margin will be greater

    than 5%

    Case 2:

    Tabulated value of z is 1.6449

    Zstat= (x - )/ (^/ n)x=4.3021= 3.9271

    ^ =s= 8.03932

    n= 33

    Zstat= (4.3021 3.9271)/(8.03932/ 33)= (0.375)/ (8.03932/5.744)

    = (0.375)/ (1.399)=.26804Also from the one sample t-test

    One-Sample Test

    Test Value = 3.9271

    t df Sig. (2-tailed) Mean Difference 95% Confidence Interval of the

    Difference

    Lower Upper

    SampleNPM .268 32 .790 .37502 -2.4756 3.2256

    Indian Institute of Management Raipur Page 10

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    We observe that p value is greater than the value of,

    Therefore, |cal z| ,

    Hence we may accept Ho

    Asthe probability does not lie within the rejection ratio, Ho is accepted.

    Hence, with 95% confidence, we can say the net profit margin will be greater

    than 3.92%.

    Indian Institute of Management Raipur Page 11

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    Regression Analysis

    We have done the regression for 10 brands. However the Regression analysis for

    Provogue Industry has only been shown below. Same procedure has been

    followed for the rest of the 9 brands.

    REGRESSION CALCULATION FOR PROVOGUE INDUSTRIES

    MODEL:

    Assumptions:

    a.) Linearity: We assume that the factors are linear.

    b.) Independence of errors: Durbin Value=2.47 which is slightly more than 2.

    Therefore the errors are slightly negatively co-related. However, It is

    accepted.c.) Normality of errors: The PP graph shows that the errors are