Bombay Rayon Fashion Case Study

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Company Background Bombay Rayon Fashions Limited (BRFL) is a Mumbai based textile company, engaged in the manufacture and exports of wide range of fabrics and garments with tie-ups with various international brands viz. C&A, H & M, Inditex group (Zara), Gap, Abercrombie & fitch, Walmart etc. to supply fashion garments. The company commenced operations as a 100 per cent fabrics company in the early 1990s. Subsequently to move up in the value chain, it forayed into high-margin garments business with a series of forward integration. The garments business currently accounts for more than 60 per cent of the total turnover of the company. BRFL is a promoter-driven company with the promoters currently holding 43% of the total shareholding of…show more content…
India is the 3rd largest producer of cotton and cellulose fiber/yarn, 2nd largest producer of cotton yarn, largest producer of jute, 2nd largest producer of silk and 5th largest producer of synthetic fiber/ yarn. India accounts for 3.3% of the world trade in textiles and clothing and is ranked as 6th largest supplier. The total textile exports were estimated at USD13 billion in FY2007. India has presence across the entire value chain of the textiles and clothing business. It covers the chain from fiber production, spinning, weaving/knitting, processing to garments and made…show more content…
As per the industry standards, the conversion norms from one product category to other is presented below: Conversion factor 1 meter of Grey Fabric 0.22 kg of yarn 1 meter of Finished Fabric 1.01 meter of Grey Fabric (GF) 1 piece of Garment 1.75meter of Finished Fabric (FF) Source:CompanyData For every single piece of garment the company requires approx. 1.75 meter of finished fabric (FF), which is equivalent to 1.77 meter of GF requirement. For manufacturing 1.77 meter of GF the process requirement for yarn is roughly around 0.38 kg. The detailed business model of the company is explained in the flow chart below. The company’s sales are realized from sale of finished fabric and RMG. The company has manufacturing facility for finished fabric (FF) and RMG. For manufacture of RMG, the company requires FF which can be procured either internally or from outside. The company’s FF production partly meets the requirement of the garmenting units. Part of FF requirement is met from outside, which is based on factors like clients requirement and lead-time. For FF production, the company requires supply of Grey Fabric (GF). The GF is met partly from internal production and partly from outside. The company’s GF requirement exceeds the installed capacity. Hence, the company has to procure GF from outside. The company can either procure

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