How can Lalit Synthetics remain competent and maintain profitability, in the existing business environment of the textile

industry?

-Suhanee Bakeri BBA, Semester 2 Amity Global Business School-Ahmedabad

Introduction

This project looks into how an Ahmedabad based trading firm, Lalit Synthetics functions profitably in a highly competitive and currently recessionary-to-stagnant market. Lalit Synthetics supplies printed fabrics to garment exporters and domestic brands. Its main work is to translate CAD images forecasted by European and American design houses onto fabric. The company buys grey fabric from domestic manufacturers, gets it processed so as to make it white, and then gets it printed as per the orders given by its clients.

The finished product then undergoes various tests so as to meet the quality requirements set by the clients as well as the government.

Business Environment

Once this procedure is completed, the fabric is supplied to the garment exporters. Due to recessionary trends during the last 2 and a half years, profit margins are squeezed and volumes have decreased. The textile industry however, like any other industry has many environmental factors, both micro and macro, that affect the functioning of trading firms like Lalit Synthetics The owner of the business, Mr. Lalit Bakeri can do little to stabilize these global economic conditions and other environmental factors that heavily influence the textile industry.

These factors are challenging and more or less out of control of the proprietor. I have looked into various such business environmental factors, and have eventually found one area which can be manipulated by the proprietor to increase competence and profitability.

Since most other environmental factors are tough or impossible to control or change, I have decided to concentrate on devising a plan to reduce the semivariable costs of the company so as to make it more competent and profitable in the current business environment.
The following are the results obtainable by using them.

Percentage Reduction in costs

Total Costs Incurred

Initial costs (INR)

Reduced costs (INR)

60% Transport 25000 10000 60% Courier 50000 20000 67% Fabric Rail Freight 150000 50000 67% Fabric Air Freight 450000 150000 67% Garment Air Freight 225000 75000

37.5% QC personnel costs 40000 25000

54.5% Overtime salaries 55000 25000 64% Total Costs 995000 355000

Comparison between initial and reduced operating costs

500000 450000 450000

400000 Initial costs

350000

300000

Reduced costs

250000

225000

200000

150000
150000

150000

100000

75000
50000 50000 25000 10000 0 Transport Courier Fabric Rail Freight Fabric Air Freight Garment Air QC Freight personnel costs 20000 25000 50000 40000

55000 25000 Overtime salaries

Conclusion

The costs of transportation, courier, fabric rail freight, fabric air freight, garment rail freight, personal costs, and overtime salaries, are leading to very high costs to the company, which can be easily curbed using the measures mentioned above. There is an overall decrease of 64% in the operational costs if Lalit Synthetics follows the above mentioned measures. Curbing these few costs will lead to increase in the profit-margin of the company despite the global recessionary trend, in turn helping the company to survive and function efficiently in an excessively challenging business environment. While macro-environment is not in a traders control, how he manages the micro-environmental aspects determines his success and the profitability of his ventures. This project has suggested ways to do exactly that, without compromising on quality and human-resource satisfaction.