The document summarizes a summer training project on organic cotton undertaken at Aarti International Limited. It provides an overview of the Indian textile industry and company Aarti International Limited. It then discusses the objectives, methodology and findings of the research conducted on organic cotton and the opportunity it presents for the Ludhiana textile industry to trade in the global market. Key findings include garments being the largest organic cotton product, over 50% of manufacturers exporting organic cotton products, and increasing basket size and profitable opportunities influencing entry into the organic cotton business.

1. Summer Training Project on Organic Cotton: An Opportunity for Ludhiana textile industry to trade in Global textile market Undertaken at AARTI INTERNATIONAL LIMITED Presented by: Nitin Goel MBA-IB (2B) Roll No. 94972238291

5. Introduction to Aarti Group

12. Introduction to Aarti International Ltd.

25. Ratio Analysis of Aarti International Ltd.

26. Liquidity Ratios

27. Current ratio ( Fig. In Crores ) Year 2006-07 2007-08 2008-09 Current assets 167 193 186 Current liabilities 85 93 87 Current ratio 1.96:1 2.07:1 2.14:1

28. Quick Ratio ( Fig. In Crores ) Year 2006-07 2007-08 2008-09 Quick assets 71 62 76 Current liabilities 85 93 87 Quick ratio 0.84:1 0.67:1 0.87:1

29. Activity Ratios

30. Inventory turnover ratio ( Fig. In Crores ) Year 2006-07 2007-08 2008-09 Cost of goods sold 284 218 278 Average inventory 98.5 115 121 Inventory turnover ratio ( in times) 2.88 1.89 2.3 Inventory holding period ( in days) 126.7 192.3 158.7

31. Debtor turnover ratio ( Fig. In Crores ) Year 2006-07 2007-08 2008-09 Net credit sales 275 276 345 Average debtors 64 61 64 Debtors turnover ratio 4.24 4.49 5.43 Debtor conversion period 86.1 81.3 67.2

32. Creditor turnover ratio ( Fig. In Crores ) Year 2006-07 2007-08 2008-09 Net credit purchases 248.5 190.7 187.9 Average creditors 10.57 11.43 11 Creditor turnover ratio ( in times ) 23.51 16.68 17.08 Average payment period ( in days ) 15.52 21.88 21.37

33. Capital structure ratios

34. Debt –equity ratio ( Fig. In Crores ) Year 2006-07 2007-08 2008-09 Debt 256 368 362 Equity 163 170 162 Debt equity ratio 1.57:1 2.16:1 2.23:1

35. Proprietary ratio ( Fig. In Crores ) Year 2006-07 2007-08 2008-09 Shareholder fund 162 170 162 Equity 444 238 536 Proprietary ratio 37% 71% 30%

36. Solvency ratio Year 2006-07 2007-08 2008-09 Proprietary 37% 71% 30% Solvency ratio 63% 29% 70%

37. Profitability ratios

38. Gross profit ratio ( Fig. In Crores ) Year 2006-07 2007-08 2008-09 Gross profit 73 58 68 Net sales 275 276 345 Gross profit ratio 26.6% 20.9% 19.6%

39. Net profit ratio ( Fig. In Crores ) Year 2006-07 2007-08 2008-09 Net profit 14.35 12.4 10.97 Net sales 275 276 345 Net profit ratio 5.2% 4.49% 3.96%

40. Operating profit ratio ( Fig. In Crores ) Year 2006-07 2007-08 2008-09 Operating profit 56 41 35 Net sales 275 276 345 Operating ratio 20.34% 15% 9.08%

41. Return on shareholders’ equity ( Fig. In Crores ) Year 2006-07 2007-08 2008-09 Net profit after taxes 14.35 12.4 10.97 Shareholders’ fund 275 170 170 Return on shareholders’ equity 5.22% 7.3% 6.45%

42. Trend analysis

43. Trend of Turnover Years Sales (Rs. In Crores) Trend ( In %) 2004-05 143.68 100 2005-06 154.28 107.38 2006-07 274.92 191.34 2007-08 276.09 192.16 2008-09 345.43 240.42

44. Trend of Net Profit / Loss Years Net Profit (Rs. In Crores) Trend ( In %) 2004-05 17.49 100 2005-06 18.61 106.4 2006-07 14.35 82.05 2007-08 12.41 70.95 2008-09 10.97 62.72

45. Trend of EPS Years EPS (Rs.) Trend (In %) 2004-05 25.98 100 2005-06 25.29 97.34 2006-07 16.61 63.93 2007-08 14.03 54 2008-09 11.47 (31.25)

46. Introduction to the Project

52. Global retail sales of organic cotton products Source: Organic Exchange 2009 Market Report

54. Title of the Research Organic cotton: An opportunity for Ludhiana textile industry to trade in global textile market

56. Research Methodology

60. Data Analysis and Interpretation

61. Table 5.1-No of organic cotton textile products manufacturers & exporters in Ludhiana (N=40) Products Yarn Fabric Garment Knitted Woven Knitted Woven Knitted Woven No of responses 12 6 16 4 19 4 No of respondents 40 40 40 40 40 40 Percentage 30% 15% 40% 10% 47.5% 10%

62. Fig. 5.2- Annual turnover of the manufacturers & exporters in the year 2009-10 (N=40)

63. Fig 5.3- Proportion of export of organic cotton products out of total sales (N=40)

64. Fig 5.4-Export trend of organic cotton textile products since manufacturers have started making (N=40)

65. Fig 5.5-Factors resulting in an increasing demand of organic cotton textile products (N=40)

66. Fig 5.6-Factors resulting in decreasing & constant demand of organic cotton textile products (N=40)

67. Fig 5.7-No. holders of valid operational certificate applicable for the production/ trade of organic cotton textile products (N=40)

68. Fig 5.8-Holders of different types of operational certificate (N=40)

70. Table 5.9(b)-Rating of price factor (N=40) Rating No. of respondents Product Most considered (+2) 26 52 More considered (+1) 13 13 Neutral (0) 1 0 Less considered (-1) 0 0 Least considered (-2) 0 0 Total Mean 40 65 1.625

71. Table 5.9(c)-Rating of quality factor (N=40) Rating No. of respondents Product Most considered (+2) 16 32 More considered (+1) 14 14 Neutral (0) 9 0 Less considered (-1) 1 -1 Least considered (-2) 0 0 Total 40 45 Mean 1.125

72. Table 5.9(d)-Rating of lead time factor (N=40) Rating No. of respondents Product Most considered (+2) 4 8 More considered (+1) 14 14 Neutral (0) 14 0 Less considered (-1) 6 -6 Least considered (-2) 2 -4 Total 40 12 Mean 0.30

73. Table 5.9(e)-Rating of long term relationship factor (N=40) Rating No. of respondents Product Most considered (+2) 12 24 More considered (+1) 12 12 Neutral (0) 8 0 Less considered (-1) 3 -3 Least considered (-2) 5 -10 Total 40 23 Mean 0.575

74. Table 5.9(f)-Rating of reputation of supplier factor (N=40) Rating No. of respondents Product Most considered (+2) 7 14 More considered (+1) 12 12 Neutral (0) 11 0 Less considered (-1) 7 -7 Least considered (-2) 3 -6 Total 40 13 Mean 0.325

75. Fig 5.10-Combined result of various parameters while procuring raw material

76. Factors influencing people to enter in to organic cotton textile products business Table 5.11(a)-Rating of increasing basket size factor (N=40) Rating No. of respondents Product Most influencing (+2) 17 34 More influencing (+1) 11 11 Neutral (0) 5 0 Less influencing (-1) 4 -4 Least influencing (-2) 3 -6 Total 40 35 Mean 0.875

77. Table 5.11(b)-Rating of Highly profitable factor (N=40) Rating No. of respondents Product Most influencing (+2) 4 8 More influencing (+1) 18 18 Neutral (0) 14 0 Less influencing (-1) 2 -2 Least influencing (-2) 1 -2 Total 40 22 Mean 0.55

78. Table 5.11(c)-Rating of Necessary for survival factor (N=40) Rating No. of respondents Product Most influencing (+2) 3 6 More influencing (+1) 16 16 Neutral (0) 14 0 Less influencing (-1) 7 -7 Least influencing (-2) 0 0 Total 40 15 Mean 0.375

79. Table 5.11(d)-Rating of to remain competitive factor (N=40) Rating No. of respondents Product Most influencing (+2) 11 22 More influencing (+1) 18 18 Neutral (0) 6 0 Less influencing (-1) 4 -4 Least influencing (-2) 1 -2 Total 40 34 Mean 0.85

80. Table 5.11(e)-Rating of helps in branding or differentiation factor (N=40) Rating No. of respondents Product Most influencing (+2) 1 2 More influencing (+1) 12 12 Neutral (0) 9 0 Less influencing (-1) 13 -13 Least influencing (-2) 5 -10 Total 40 -9 Mean 0.225

81. Table 5.11(f)-Rating of global demand factor (N=40) Rating No. of respondents Product Most influencing (+2) 19 38 More influencing (+1) 10 10 Neutral (0) 7 0 Less influencing (-1) 3 -3 Least influencing (-2) 1 -2 Total 40 43 Mean 1.075

82. Combined result of factors influencing people to enter into organic cotton textile products business Fig 5.12-Factors influencing people to enter into organic cotton textile products business

83. Table 5.13-Steps that government should take to boost the sales of organic cotton textile products in the global textile market (N=40) Steps Regulate prices Favourable global policies Create awareness of eco-friendly products Encourage farming of organic cotton Incentives to farmers to grow organic cotton Others No of responses 24 7 17 9 6 1 No of respondents 40 40 40 40 40 40 Percentage 60% 17.5% 42.5% 22.5% 15% 2.5%

87. Conclusion and Suggestions

92. THANK YOU