“Analysis of Marketing Mix Activities and Import – Export Analysis of Sonali Textile Mills Limited”
1.1 Overview of the industry:
|1.||Spinning Sub-sector||No. of Unit:|
|a. Private Sector:||214||237|
|b. Public Sector:||23|
|No. of Spindles:|
|a. Private Sector :||4809473||5299473|
|B. Public Sector :||49000|
|Rotor Spinning (Open-end)||500|
|Annual Production Capacity (million Kg)||125000|
|a. Large Weaving & Weaving Dyeing composite mills:||278|
|b. Specialized Power Loom Unit||1065|
|Annual Production Capacity: (million meters)||1000|
|3.||Hand Loom Sub-sector:||(No. of Unit)||148350|
|No. of handloom:||350000|
|Annual Production Capacity:(million meters)||92|
|4.||Knitting & Knit Dyeing Sub-sector (Export Oriented Unit):||446|
|Annual Production Capacity (million meters)||1400|
|a. Mechanized dyeing & finishing unit:||(No. of Unit):||291|
|b. Semi-mechanized dyeing & finishing unit:||115|
|Annual Processing Capacity: (million meters)||1000|
|6.||Export Oriented RMG Sub-sector:||3800|
|Annual Production Capacity: (million meters)||215|
Sonali Textile Mills Ltd is one of the largest textile mills in Bangladesh. STML is the spinners of quality polyester, TC, Viscose’s, Cotton yearn, Semi synthetic yearn in Bangladesh. It also produces home textile goods like curtain, dyed kitchen linen and bed shits. This textile mills is establish 1977. It is an export oriented company. It serves 70% of its products in local markets and 30% in overseas. So considering their time period this is the oldest textile mills are in private sector in Bangladesh. The location of STML is Daudkandi in Comilla. The company head office is in Dhaka, the address is Lal Bhaban, 18, Rajuk Avenue, Dhaka-1000. The distance of this renowned mill is only 50 minutes drive away from the heart of the capital city Dhaka. The land area of the mill is 10.36 acres of high developed land.
This project enjoys excellent infrastructure facilities like electricity, gas, water, land telephone and mobile or radio phone link up it is also connected by high way. This one of the biggest Textile Spinning Mills of the country is as well as very nearer to the biggest Cotton yarn market of Narshinghdi, Madhobdi Baburhat and also Narayangonj.
This Project has been installed with world class technology from Europe Origin with SKF Germany drafting Zone. Which is capable to produce excellent quality yarn both for domestic consumption to feed local garments industrial as well as the export market.
The project has started its commercial production in 1979. Its products by this long time have created a good name in the domestic market. The quality of yarn produced by this is comparable with any well reputed spinning mill of the country. This good quality also enables the company to sell at a higher price. All of the name and fame of the STML does not gather in one day. This is the fruit of the staffs’ hard working and long term vision of the board of directors.
Mainly export oriented readymade garments industry and local and foreign yarn market.
Ø Each of activities must benefit
Ø Add value to the common wealth of society
Ø Accountable to each of the constituents with whom they interact: namely employees, valued customers, fellow citizens.
Their vision is not only to meet the contemporary customer satisfaction, but also those challenges that may arise in the future. To increase the foreign export is also their vision.
Company’s Working Environment:
From the day of production run, they took the necessary steps for the preservation of the local environment. Their continued commitment towards the preventing of environmental degradation and the necessary technological investments has enable to continue and grow their exports day by day in strict confirm with the environmental guidelines.
The company offers an attainable clean, safe and sound congenial work place to its employees. Probable hazardous and risky workplaces are properly marked with sings, means, and measures for easy access and safety. The workers are rationally trained for fire safely, emergency evacuation and first aid etc.
For the mill’s waste water discharge. It has a plant and is also implanting technical solution to reduce and prevent noise pollution.
Social responsibilities get importance at STML as they try relentlessly to contribute to the social development. STML is one of the leading textile mills in Comilla for producing cotton yarn, house textile and long cloth. As a leading textile in that locality, they are also providing job opportunity for both skilled and fresh qualified people.
Their responsibility to the society encourages them to go beyond the sphere of common practices in creating better working environment. All the workers use safety procedures for minimizing health hazards. Saline water is also supplied to the workers is not summer season. Sufficient medical support is always available with highly qualified doctors, nurses and medicines. The company also provides transportation and housing facilities for some employees. They also contribute donation to the local poor meritorious students for higher study. Their employees are also given training facilities at home to enhance their skills and knowledge.
Thus by developing human health and responding towards their welfare, STML is contributing to the society.
The maintenance of effective Corporate Governance remains a key priority to the Board of STML. Though it is a family concern Textile Mills. Recognizing the importance of it, the Board and management remained committed to high standards of corporate governance. For focusing to the business objectives, there are clear structure and accountabilities supported by well understood policies and procedures to guide the activates of company’s management, both in its day-to-day business.
Internal Financial control:
The directors are responsible for the company’s system of internal financial control.
Mr. Nurul Islam Patwary is the Honorable Chairman and Mr. Mahbubur Rahman is the Managing Director of this company.
The following chart shows the organizational structure of STML –
Board of Directors:
Ø Establishing overall policies and procedures for approving and reviewing investment.
Ø Delegating authority to approve and review investment.
Ø Approving investment for which authority is not delegated.
The companies Act. 1994 requires the directors to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the company as the end of the financial year and of the project for the year to that date. In preparing those financial statements the directors are required:
Ø To select suitable marketing policies and then apply in a consistent manner.
Ø To make reasonable and prudent judgments and estimates where necessary.
Ø To safe whether all applicable accounting standards have been followed, subject to any material departures disclosed and explained in the notes to the financial statements.
Ø To take such steps as are reasonable open to them to safeguard the assets of the company and to prevent and detect fraud and other irregularities.
Ø To ensure that company keeps accounting records which disclose with reasonable accuracy the financial position of the company which enable them to ensure that the financial statements comply with the companies Act 1994 and the securities and Exchange Rules 1987.
Ø To prepare the financial statements on a going concern basis unless if is inappropriate to presume that the company will continue in business.
Role of the Board:
The Board is the highest level of authority of the company to oversee its operation through appropriate delegation and control.
Reporting and Communication:
The Managing Director reviews and approves the strategic plans of the Business. He also reviews monthly reports of the financial performance and marketing performance of the Business.
Departments of STML:
There are mainly five department of STML. They are-
Ø Production Department
Ø Marketing Department
Ø Accounting Department
Ø Commercial Department
Ø Merchandising Department
As discuss Earlier, STML exports 30% of its production. So commercial department and Merchandising department help for exporting goods. For operating smoothly, STML has its Head Office in Dhaka.
The product range of Sonali Textile Mills are-
Ø Cotton Yarn, Semi-Synthetic Yarn, Polyester, Viscos and TC
Ø Printed & plain Dyed Ready-made curtain (window-Furnishing)
Ø Printed & Dyed Kitchen Linen
Ø Any other wide-width application up to 3200 mm (126 inches) finished width.
The quality policy of the textile Mill is, “We strive to surpass the minimum quality requirements defined in the purchaser’s contracts.”
Mainly Sonali Textile Mills have two divisions namely.
Ø Spinning Division
Ø Dying & Printing Division
For spinning division, the following steps are followed-
Ø Making 100% cotton yarn from 100% raw cotton
Ø Making mixed yarn form mixed and wastage cotton
For dying and printing division, the following steps are followed-
Ø Washing of Greige fabric
Ø Necessary color is given for Greige fabric
Ø Doing Squezer for Dying fabrics
Ø Dryer the Dying fabrics
Ø Finished the products.
Above all the processes are related to the processing units. In the processing unit employs some qualified technicians & experts and are supervising the top production and quality control.
The quality team works round the clock to ensure quality of Greige fabrics through finished goods for export & local market.
It is one of the important departments of STML. It is liable for evaluating the financial performance of the company. The Head of the accounts department is Director and he is responsible for the company’s system of internal financial control. Although no system of internal control can provide absolute assurance against material misstatement and loss, the company’s system is designed to provide the director with reasonable assurance that problems are timely identified and dealt with appropriately.
Commercial Department is related for exporting. As 30% product of STML is exported, so commercial Department plays a significant role for the company. The main tasks of commercial Department are as follows-
Ø Opening a letter of credit
Ø Acceptance L/C
Ø Realize L/C
Ø Putting order shipment
Ø Doing everything related with customs
Merchandizing Dept. plays a vital role for export. When an order is taken from the buyer, the merchandiser is doing everything for completing the order in such way that buyer has no complain about the product.
It is the most important department of this company. Although STML exports 30% & rest of 70% sale in local market, they have no strong marketing Department. For local marketing, at first they collect order from different clients and garments, and according to their requirements they produce the product and then supply to them. Only few persons / agents are related with the marketing.
Organogram of Marketing Department:
Responsibilities of Marketing Department:
Marketing Department is very responsible department for any kind of company. Especially for export oriented companies. The more the marketing department will be stronger the more the profit will be. Without proper marketing a business can not achieve the desire goal.
The responsibilities that are Marketing Department performing are as follows:-
Ø At first setting the target market and desire profit margin.
Ø Then selecting suitable marketing policies and applying in a consistent manner.
Ø To make reasonable and prudent judgments and estimates where necessary and then apply again.
Ø Taking part in different trade shows and trade fairs both in home and abroad.
Ø To keep pace with the competitive market RND cell is working under the marketing department.
Ø As it is a very competitive department, every now and then new employees are recruited and trained for better performance.
Problems Associated with Marketing Department:
STML is established in 1977. Now it is running its 28 years of official operation (STML started commercially in 1979). Among other department Marketing Department is one of the important departments for the company. But it has several problems. All the problems are given below-
Ø The working Environment for the Marketing Department of STML is not well enough.
Ø Today’s world is getting computerized. Every worker works with computerized software Even though it is an export oriented (30%) textile mills, it’s Marketing Department has only few computers.
Ø There are lacks of skilled and trained Marketing Officers.
Ø Sometimes senior officers did not provide accurate guidelines to the junior officers.
Ø The budget for RND cell under Marketing Department is not enough.
Analysis of the Marketing mix activities:
Marketing mix is very important in marketing activities. STML has some also marketing mix activities. Now we will be analyzing this –
STML manufactures different types of yarn such as cotton yarn, viscos, acrostic yarn, T/C, cotton combed yarn and so on. This mill was established at 1977. At that time our country’s textile mills & garments manufacturers were depending on imported yarn from foreign countries. Then they established this mill. At that time they setup spinning units because then there was a great demand of yarn, beside this they have long time experience in yarn business and raw cotton. So they chose to manufacture this product. They have strong back grounds identified and bonafide consumers. So at that time they started this business. Beside this our country could not produce sufficient yarn. There is always a deficiency of yarn. The amount of the deficiency yarn is about 1.75 cror kgs. To fulfill the increasing demand of our yarn market STML are still producing the yarn. This mill always produces quality yarn, so that there are enough composite textile mills in Bangladesh. They manufacture yarn but still STML hold their market. Their products have a good demand in textile mills, local power looms, and local weavers and garments manufacturers. The main customers of their cotton yarn are our country’s textile mills and local power looms owners and also ready made garments companies. The local weavers and garments manufacturers are the customers of T/C and cotton combed T/C yarn. Beside this some synthetic cotton manufacturers are the main buyers of their viscos and their acreaylic yarns. They are always modifying their product’s quality. Before presenting any products to the market they analysis the market demand and their competitors and then their experience motivate them to produce these types of yarn.
Price is very much related with the products. This is one of the most important strength for the company. STML always produce quality products. They can not negotiate with their quality. So they always use imported raw materials to hold their products quality. They mainly import raw materials from USA and central Asia. They never import any bad quality raw materials. STML need to pay some extra money to import raw materials from those countries. So the manufacturing price increases a little bit. But considering the above quality the price is not very high. Besides this STML always believe in fair competitive markets. So they don’t reduce their products price unnecessarily or increase it. The Price of STML is always stagnant but it is true that there price is mainly cost based. The Sonali Textile Mills Ltd sell their products at a very nominal profit.
Place (Distribution Channels):
Place is very much important for any business. It has a great effect on business. STML established in 1977 at Comilla. Few years later it started its commercial activities. The corporate head office is at Motijheel, Dhaka. Motijheel is known as the heart of corporate business. There is already many textile mills head office established. So the mill authority can get enough chance to communicate with their clients, and they can easily fulfill their clients’ requirement. On the other hand, Comilla is one of the most familiar places in Bangladesh. This area is connected by high way and has got all the infrastructure facilities, like national greed line of electricity, high pressure of gas and water supply. They get all the facilities to operate their business soundly. On the other hand Daudkandi is very near and well collected with one of the biggest cotton Yarn market of the country named Madhobdi, and Baburhat at Nashinghdi. We can see that this organization enjoys lots of facilities, they can easily contact and reach their goods to the local weaker and they can maintain liaisons with their industrial clients from their head office. STML has a proper distribution channels. They have 165 main distributors and lots of enlisted brokers and commission agents. Here the channels are between the nations. STML has 10 Showrooms at Narshinghdi, Kushtia and Narayangonj. Beside this they sell their products at their Mill gate. They distribute their products and yarns to their benefited dealers at a definite amount. So that the dealer can not black marketing their products. They always pay close observation to the market. Sonali Textile Mills Ltd. provide their own transports to send their products place to place.
Promotion is very much important for any company’s product marketing. Proper promotional activities can help a company to meet their goal. Every company must allocate the promotion budget over the five promotional tools.
These are as follows:
2. Sales Promotion
3. Public Relations & Publicity
4. Sales Force
5. Direct Marketing
Advertising is very much important, for any product’s sales advertising can be used to build up a long term image for a product. STML is a renowned textile mills. It has a large name and fame. This mill does not forecast their advertising in electronic media or any print media regularly. Actually they always depend on their distributors good wills.
They have some billboard at Baburhat, Narsinghdi. They believe that their good wills and quality products can drag customer’s attraction.
Sales promotions are very much important. There are some different tools for sales – promotion like Coupons Contests premiums. STML always give their interest at sales promotion. They have 165 main distributors. Their product is mainly selling through them. They gain alternation and usually provide information that may lead the consumer to the product. STML incorporate some concession Inducement or contribution that gives value to the consumer. Sonali Textile Mills Ltd gives good amount of commission. Beside they give them a portion of the company’s profit to motivate them. They company follows different types of activities to increase the sales promotions and motivate their sales persons.
Public relation & Publicity:
STML always pay close attention to the public relations to hold their good wills and introduce public with their products. It also helps them to drag customers’ attention. The public relations activities have an ability to catch buyers off guard. Public relations can reach prospects that prefer to avoid sales people and advertising. Public relations have the potential for dramatizing a company or products. STML often donate different charity Programs. Beside this they maintain a School, College, Doctors corner from the own fund. Nowadays they are doing a great job. It is tree plantations on the both side of Dhaka-Comilla High way.
Sonali Textile Mills Ltd sometimes operate direct marketing to increase their promotion, some times they sell their yarn and cotton products from their mill gate, with good amount of discounts. Beside this sometime they take order from the big Textile Mills and from weaving associations by their efficient manpower and follow direct marketing.
Import & Export Analysis of STML:
STML is a 30% export oriented Yarn manufacturing company. They mainly produce Yarn and export it to Fabrics manufacturing company and fabrics manufacturing company export it to garments industry through Back to back L/C. Garment industry export this fabrics against master L/C after certain process in this sense, STML is an Exporter of yarn. But in the commercial term these kinds of exporter are called deem exporter. As main job of STML is to manufacturing and exporting of Yarn so they need some raw materials and axillaries to manufacturing this product. Main raw materials of STML are various types of raw cotton. As Sonali is a vertical integrated company. So they have forward and backward linkage facility. They have fabrics manufacturing company and they have garments manufacturing company. Sonali Knit Fabrics Ltd gets 100% L/C from their own garments Industry and Sonali Textile Mills Ltd. Get 60% L/C from their own company. Sonali Knit Fabrics Ltd and another get 40% from other companies. So that the buyers of Sonali Fashions & Others garment industry are the ultimate buyers of STML. Sonali Textile Mills Ltd mainly procure their raw cotton by 100% cash L/C.
As the main raw martial of Sonali Textile Mills Ltd is raw cotton. So the procure their raw materials under two ways.
As STML is one of the largest finest yarn manufacturing companies of Bangladesh. So they need various types of raw cotton. But we cannot produce high quality of raw cotton in our country. So we are 100% depended on imported cotton, so that STML’s local import is nil.
As we know that to produce high quality of yarn need high quality of raw cotton. High quality of raw cotton means which cotton exists length fiber is long and fibers are matured. To produce high quality of raw cotton mainly needs favorable weather condition but we have not. So ultimately we are fully depended on imported raw cotton for our textiles mills. STML mainly procure central Asia’s cotton. Uzbekistan’s, Turkmenistan’s, Kazakhstan’s, and Tajikistan’s raw cotton as per their buyers satisfaction. Though the price of central Asia’s raw cotton are higher than the others cotton. Sonali Textiles also procure raw cotton from Zimbabwe, Syria, USA, India, West African, Indonesia, and Thailand etc through cash L/C.
Comparison to other companies with Import Policy:
Sonali Textile Mills Ltd think, though customers like central Asia’s cotton at higher price and most of the spinning mills go for central Asia’s cotton as per their customers satisfaction. But this trend will not continue for long period. Because may be central Asia’s companies think they will produce yarn in their own country or others company like Sonali. They are thinking to establish a plant in central Asia’s country. Then central Asia’s cotton are not available then what will do the others company. Sonali Textiles Ltd always think different. For this reason to face this problem they use 60% to 50% CIS cotton and 40% to 50% others cotton which quality is same like CIS cotton to overcome future any problem. Sonali textiles do not follow others, so all over the year they procure cotton for two or three month advance. So that over the year they can maintain average cotton price and they do not loss hugely and they do not gain hugely. But on the other hand, others company they forward book all over the year so if the cotton price is higher then they gain hugely and cotton price is down they loss hugely.
Last three years import position:
Quantity Import in Thousand (Taka)
2006 2005 2004
Raw materials Import 1293112 1069660 1293012
Total Sales 1293112 1069660 1293012
Direct export of Sonali Textile Mills Ltd is so little, because they import 100% raw cotton from abroad. So their yarn price is higher than the others country.
As a deem exporter STML export their 40% yarn to their own sister concern Sonali Knit Fabrics Ltd and balanced yarn they export to the others textiles industry through back to back L/C. Sonali Knit Fabrics Ltd mainly export their 100% fabrics to their another sister concern Sonali Fashions Ltd which is a world class garments manufacturing company and others textiles industry export their fabrics to others garments company in our country. Sonali Fashions ltd and others garments company have strong marketing team. They visit all over the world to market their product to world class buyer like Puma, Nike, Asda, Matalan. Allmart, Mark & Spencer, Kitaro, Redfild, H&M, Ashcity, Mexx etc. Sonali Fashions Ltd and others garments company mainly collect L/C from those world class buyer and Sonali Fashions Ltd give L/C to Sonali Knit Fabrics Ltd and others garments company give L/C to another Fabrics manufacturing company to collect fabrics. As well as Sonali Knit Fabrics Ltd and others textiles mills give L/C to STML to collect yarn for producing fabrics. As Sonali Textiles is a deem exporter so they export their yarn to Sonali knit Fabrics and others textiles industry. Sonali Knit Fabrics and others textiles company export their fabrics to Sonali Fashions and others garments industry and garment companies are direct exporter. So in this sense STML is 100 % export oriented yarn manufacturing company. Sonali Textile Mills Ltd also sale a little portion of yarn in locally which is produce by wastage cotton. These types of yarn are “B” Grade and they do not meet the export quality. They also sale a little portion of yarn in abroad.
Comparison to other companies with Export Policy:
Sonali’s policy is always different from the others company policy. So STML follow some technique to increase their export. Like in production they use heterogeneous system to create a big lot. As same quality of cotton they mix as bellow:
Uzbekistani’s Cotton 2 Bells
US Cotton 1 Bell
Syrians Cotton 2 Bells
West African’s Cotton 3 Bells
Indonesia’s Cotton 1 Bell
Total: 9 Bells
And create a big lot 90 tons to 100 tons, so that big customers always prefer to use same lot of yarn to get better result in dyeing and there no shade variation for their big production. Sonali Textiles always try to produce same quality of yarn all over the year for this reason buyers always prefer Sonali textile’s Yarn but others company follow general system. Where they use same cotton. When they use Uzbek cotton then they use only Uzbek cotton. So that their yarn lot is always small. 30 to 40 tons and all over the year they cannot maintain the same quality, so big buyer do not prefer their yarn for their huge production.
STML follows another technique. They always try to meet customer’s shipment on due date but on the other hand others company always cannot do that. So STML’s sale is always increasing.
Lacking of Policy:
Sonali Textile Mills Ltd always use heterogeneous system. They use mix cotton to produce yarn, so their production cost is less and others company use general system. They use 100 % Uzbekistani’s cotton it is costly so their production cost always high. If in the market create a rumour that Sonali textiles do not use 100% Uzbek cotton but their yarn rate is higher than the others. Which is bad for them and they can lose their big market.
7.2.5 How can overcome this lacking:
Sonali Textile Mills can avoid heterogeneous system and they can increase their dependency on Central Asia’s cotton.
They can reduce their yarn price and convince customers that though Sonali use heterogeneous system but their result is same like central Asia’s cotton.
They can also convince their customers to reduce dependency on CIS cotton to absorb any shock in future.
Last four years sales turnover:
Quantity sold in thousand (KG.)
2006 2005 2004 2003
Export sales 99 527 539 453
Local sales 12554 11417 11129 10705
Total Sales: 12653 11944 11668 11158
Quantity sold in thousand (TAKA)
2006 2005 2004 2003
Export sales 29455 32576 46956 43881
Local sales 2073214 1856441 2029968 2054190
Total Sales: 2102669 1889017 2076924 2098071
Shamim Spinning Mills Ltd. 27%
Padma Textiles Ltd. 25%
Square Textiles Ltd. 20%
Mother Textiles Ltd. 15%
Sonali Textile Mills Ltd. 08%
Prime Textile Ltd. 05%
Based on the findings and its’ interpretation, the following recommendations can help STML and remain competitive and progressive in the market.
Ø They working condition of the marketing department should be improved. Employees must be provided with adequate working resources. So they can perform their job smoothly.
Ø The salary level should be increased as most of the employees feel that their salary level is much lower than others. If this does not happen then there is a good chance that the department is going to lose some experienced employees.
Ø Employees must be put into challenges, so they feel excited and important. Moreover it will increase their working interest & improve their services.
Ø Hired more skilled and expert employees.
Ø The company is legging behind the technology. So use more modern technology for update information.
Ø Ensure collection of periodical reports, returns, and information about the borrowers.
Ø In Marketing Department number of marketing agents and sales representatives should be increased.
Ø They can arrange get together for their buyer at least one time in a year where buyer can freely discuss their problem and they can give their advice to overcome problems.
The company should always monitor the performance of its competitor in the field of local and foreign trade.
Today’s business is very competitive and complex. To survive in the market the organization needs competent people and has to take some effective policy. Now a day, textile section continuous to contribute to a great deal in the economy of Bangladesh.
STML have done 28 years of operation in the textile sector. Now a days, there are opportunities for the textile mills to go in the world market for some treats with European countries. As STML export only in few countries. So STML has huge opportunity to enter in the European and American market. If STML can grab this huge market it will not only help STML but also help the economy of Bangladesh.
Ø Annual Report of STML
Ø Annual Report of BGMEA
Ø Annual Report of EPB
Ø Annual Report of Bangladesh Textile Mills Owners Association
Ø Annual Report of Bangladesh Spinning Mills Owners Association
Ø Annual Report of Bangladesh Economic Society
Ø Paper cutting from different daily newspapers.