You are on page 1of 28

REPORT SUBMITTED TOWARDS THE PARTIAL FULFILLMENT

OF GRADUATE DEGREE IN BACHELOR IN BUSINESS


ADMINISTRATION

ARVIND MILLS
(TEXTILE INDUSTRY)

SUBMITTED BY:
NAINA GARG

BBA (2007-2012)

Roll No. : A1806507023

MENTOR:

MS. MEENAKSHI MALHOTRA

BUSINESS SCHOOL, NOIDA

BHARTI VIDYAPEETH UNIVERSITY


CERTIFICATE OF ORIGIN

This is to certify that Ms. Naina Garg, a student of


Graduate Degree, Amity International Business School,
Noida is working under my guidance and supervision.
She has started this project report on 7th December 2010.
This dissertation report has the requisite standard for the
partial fulfillment of the Post Graduate Degree in
International Business. To the best of my knowledge no
part of this report has been reproduced from any other
report and the contents are based on original research.

Signature Signature
(Mentor) (Student)
ACKNOWLEDGEME
NT
I express my sincere gratitude to my mentor Ms.
Meenakshi Malhotra for her able guidance, continuous
support and cooperation throughout my project, without
which the present work would not have been possible.

I would also like to thank the entire team of Amity


International Business School for the constant
support and help in the successful completion of my
project.

Signature
(Student)
CONTENT
S
Chapter Topic

Chapter 1: Introduction

Chapter 2: Company analysis

Chapter 3: Marketing strategies

Chapter 4: Financial analysis

Chapter 5: HR policies and strategies

Chapter 6: Production policies

Chapter 7: Findings and conclusion

Chapter 8: Bibliography
Chapter 1
1: OVERVIEW OF INDIAN ECONOMY AND ITS SECTORS

The Economy of India is the eleventh largest in the world by nominal GDP[1] and the fourth largest by purchasing power
parity (PPP).[1] The country's per capita GDP (PPP) is $3,290 (IMF, 127th) in 2010.[1] Following strong economic reforms
from the socialist inspired economy of a post-independence Indian nation, the country began to develop a fast-
paced economic growth, as free market principles were initiated in 1990 for international competition and foreign investment.
[9]
Economists predict that by 2020, India will be among the leading economies of the world.[10]

India was under social democratic policies from 1947 to 1991. The economy was characterised by extensive

regulation, protectionism, public ownership, pervasive corruption and slow growth.[11][12][13] Since 1991, continuing economic

liberalisation has moved the country toward a market-based economy.[11][12] A revival of economic reforms and better

economic policy in first decade of the 21st century accelerated India's economic growth rate. In recent years, Indian cities

have continued to liberalise business regulations.[6] By 2008, India had established itself as the world'ssecond-fastest

growing major economy.[14]

However, as a result of the financial crisis of 2007–2010, coupled with a poor monsoon, India's gross domestic product

(GDP) growth rate significantly slowed to 6.7% in 2008–09, but subsequently recovered to 7.2% in 2009–10, while the fiscal

deficit rose from 5.9% to a high 6.5% during the same period.[15] India’s current account deficit surged to 4.1% of GDP during

Q2 FY11 against 3.2% the previous quarter. The unemployment rate for 2009–2010, according to the state Labour Bureau,

was 9.4 percent nationwide, rising to 10.1 percent in rural areas, where two-thirds of the 1.2 billion population live.[5]

India's large service industry accounts for 57.2% of the country's GDP while the industrial and agricultural sector contribute

28% and 14.6% respectively.[16] Agriculture is the predominant occupation in India, accounting for about 52% of employment.

The service sector makes up a further 34%, and industrial sector around 14%.[17] The labour force totals half a billion

workers. Major agricultural products include rice, wheat, oilseed, cotton, jute, tea, sugarcane, potatoes, cattle, water buffalo,

sheep, goats, poultry and fish.[18]

Major industries include telecommunications, textiles, chemicals, food processing, steel, transportation equipment, cement,

mining, petroleum, machinery, information technology-enabled services and pharmaceuticals.[18] However, statistics from a

2009-10 government survey, which used a smaller sample size than earlier surveys, suggested that the share of agriculture

in employment had dropped to 45.5%.[5] In 2008-09, India's top fivetrading partners are United Arab Emirates, China, United

States, Saudi Arabia and Germany.

Previously a closed economy, India's trade and business sector has grown fast.[11] India currently accounts for 1.5% of world

trade as of 2007 according to the WTO. According to the World Trade Statistics of the WTO in 2006, India's total

merchandise trade (counting exports and imports) was valued at $294 billion in 2006 and India's services trade inclusive of

export and import was $143 billion. Thus, India's global economic engagement in 2006 covering both merchandise and
services trade was of the order of $437 billion, up by a record 72% from a level of $253 billion in 2004. India's total trade in

goods and services has reached a share of 43% of GDP in 2005–06, up from 16% in 1990–91.[19]

Sectors:

Industry and services

Industry accounts for 28% of the GDP and employ 14% of the total workforce.[17] In absolute terms, India is 12th in the world

in terms of nominal factory output.[65] The Indian industrial sector underwent significantly changes as a result of the economic

reforms of 1991, which removed import restrictions, brought in foreign competition, led to privatisation of certain public

sector industries, liberalised the FDI regime, improved infrastructure and led to an expansion in the production of fast

moving consumer goods.[66] Post-liberalisation, the Indian private sector was faced with increasing domestic as well as

foreign competition, including the threat of cheaper Chinese imports. It has since handled the change by squeezing costs,

revamping management, and relying on cheap labour and new technology. However, this has also reduced employment

generation even by smaller manufacturers who earlier relied on relatively labour-intensive processes.[67]

Textile manufacturing is the second largest source of employment after agriculture and accounts for 20% of manufacturing

output, providing employment to over 20 million people.[68] Ludhiana produces 90% of woollens in India and is known as the

Manchester of India. Tirupur has gained universal recognition as the leading source of hosiery, knitted garments, casual

wear and sportswear.[69]

Organised retail supermarkets accounts for 24% of the market as of 2008.[74] Regulations prevent most foreign investment in

retailing. Moreover, over thirty regulations such as "signboard licences" and "anti-hoarding measures" may have to be

complied before a store can open doors. There are taxes for moving goods from state to state, and even within states.[74]

Mining forms an important segment of the Indian economy, with the country producing 79 different minerals (excluding fuel

and atomic resources) in 2009–10, including iron

ore, manganese, mica,bauxite, chromite, limestone, asbestos, fluorite, gypsum, ochre, phosphorite and silica sand.[75]

Agriculture

India ranks second worldwide in farm output. Agriculture and allied sectors like forestry, logging and fishing accounted for

15.7% of the GDP in 2009–10, employed 52.1% of the total workforce, and despite a steady decline of its share in the GDP,

is still the largest economic sector and a significant piece of the overall socio-economic development of India.[78] Yields per

unit area of all crops have grown since 1950, due to the special emphasis placed on agriculture in the five-year plans and

steady improvements in irrigation, technology, application of modern agricultural practices and provision of agricultural credit

and subsidies since the Green Revolution in India. However, international comparisons reveal the average yield in India is

generally 30% to 50% of the highest average yield in the world.[79]

India receives an average annual rainfall of 1,208 millimetres (47.6 in) and a total annual precipitation of 4000 billion cubic

metres, with the total utilisable water resources, including surface and groundwater, amounting to 1123 billion cubic metres.
[80]
546,820 square kilometres (211,130 sq mi) of the land area, or about 39% of the total cultivated area, is irrigated.
[81]
India's inland water resources including rivers, canals, ponds and lakes and marine resources comprising the east and

west coasts of the Indian ocean and other gulfs and bays provide employment to nearly six million people in the fisheries

sector. In 2008, India had the world's third largest fishing industry.[82]

India is the largest producer in the world of milk, jute and pulses, and also has the world's second largest cattle population

with 175 million animals in 2008.[76] It is the second largest producer of rice, wheat, sugarcane, cotton and groundnuts, as

well as the second largest fruit and vegetable producer, accounting for 10.9% and 8.6% of the world fruit and vegetable

production respectively.[76] India is also the second largest producer and the largest consumer of silk in the world, producing

77,000 million tons in 2005.[83]

Banking and finance

The Indian money market is classified into the organised sector, comprising private, public and foreign owned commercial

banks and cooperative banks, together known as scheduled banks, and the unorganised sector, which includes individual or

family owned indigenous bankers or money lenders and non-banking financial companies.[84] The unorganised sector

and microcredit are still preferred over traditional banks in rural and sub-urban areas, especially for non-productive

purposes, like ceremonies and short duration loans.[85]

Prime Minister Indira Gandhi nationalised 14 banks in 1969, followed by six others in 1980, and made it mandatory for banks

to provide 40% of their net credit to priority sectors like agriculture, small-scale industry, retail trade, small businesses, etc.

to ensure that the banks fulfill their social and developmental goals. Since then, the number of bank branches has increased

from 8,260 in 1969 to 72,170 in 2007 and the population covered by a branch decreased from 63,800 to 15,000 during the

same period. The total bank deposits increased from 5,910 crore (US$1.28 billion) in 1970–71 to

3,830,922 crore (US$831.31 billion) in 2008–09. Despite an increase of rural branches, from 1,860 or 22% of the total

number of branches in 1969 to 30,590 or 42% in 2007, only 32,270 out of 500,000 villages are covered by a scheduled

bank.[86][87]

Energy and power

India's oil reserves meet 25% of the country's domestic oil demand.[17][93] As of 2009, India's total proven oil reserves stood at

775 million metric tonnes while gas reserves stood at 1074 billion cubic metres.[94] Oil and natural gas fields are located

offshore at Mumbai High, Krishna Godavari Basin and the Cauvery Delta, and onshore mainly in the states

of Assam, Gujarat and Rajasthan.[94] India is the fourth largest consumer of oil in the world and imported $82.1 billion worth

of oil in the first three quarters of 2010, which had an adverse effect on its current account deficit.[92] The petroleum industry

in India mostly consists of public sector companies such as Oil and Natural Gas Corporation (ONGC), Hindustan Petroleum

Corporation Limited (HPCL) and Indian Oil Corporation Limited (IOCL). There are some major private Indian companies in

the oil sector such as Reliance Industries Limited (RIL) which operates the world's largest oil refining complex.[95]

As of 2010, India had an installed power generation capacity of 164,835 megawatts (MW), of which thermal

power contributed 64.6%, hydroelectricity 24.7%, other sources of renewable energy 7.7%, and nuclear power 2.9%.[96] India
meets most of its domestic energy demand through its 106 billion tonnes of coal reserves.[97] India is also rich in certain

renewable sources of energy with significant future potential such as solar, wind and biofuels (jatropha, sugarcane). India's

huge thorium reserves – about 25% of world's reserves – are expected to fuel the country's ambitious nuclear energy

program in the long-run. India's dwindling uranium reserves stagnated the growth of nuclear energy in the country for many

years.[98] However, the Indo-US nuclear deal has paved the way for India to import uranium from other countries.[99]

2: OVERVIEW OF THE TEXTILE INDUSTRY

The textile industry (known colloquially in the United Kingdom and Australia as the rag trade) is
a term used for industries primarily concerned with the design or manufacture of clothing as well
as the distribution and use of textiles.

Cotton stage
Prior to the manufacturing processes being mechanized, textiles were produced in the home, and
excess sold for extra money. Most cloth was made from either wool, cotton, or flax, depending
on the era and location. For example, during the late medieval period, cotton became known as
an imported fiber in northern Europe, without any knowledge of what it came from other than
that it was a plant; noting its similarities to wool, people in the region could only imagine that
cotton must be produced by plant-borne sheep. John Mandeville, writing in 1350, stated as fact
the now-preposterous belief: "There grew there [India] a wonderful tree which bore tiny lambs
on the endes of its branches. These branches were so pliable that they bent down to allow the
lambs to feed when they are hungry." This aspect is retained in the name for cotton in many
European languages, such as German Baumwolle, which translates as "tree wool". By the end of
the 16th century, cotton was cultivated throughout the warmer regions in Asia and the Americas.
In Roman times, wool, linen and leather clothed the European population: the cotton of India
was a curiosity that only naturalists had heard of, and silk, imported along the Silk Road from
China, was an extravagant luxury. The use of flax fibre in the manufacturing of cloth in Northern
Europe dates back to Neolithic times.

Cloth was produced in the home, and the excess woven cloth was sold to merchants called
clothiers who visited the village with their trains of pack-horses. Some of the cloth was made
into clothes for people living in the same area and a large amount of cloth was exported.

The process of making cloth depends slightly on the fiber being used, but there are three main
steps: preparation of fibers for spinning, spinning, and weaving or knitting. The preparation of
the fibers differs the most depending on the fiber used. Flax requires retting and dressing, while
wool requires carding and washing. The spinning and weaving processes are very similar
between fibers though.
Spinning evolved from twisting the fibers by hand, to use of a drop spindle, to a spinning wheel.
Spindles or parts of them have been found in very, very old archaeological sites; they may
represent one of the earliest pieces of technology available to humankind. was invented in India
between 500 and 1000 AD[1] It reached Europe via the Middle East in the European Middle
Ages.

Weaving, done on a loom has been around for as long as spinning. There are some indications
that weaving was already known in the Palaeolithic. An indistinct textile impression has been
found at Pavlov, Moravia. Neolithic textiles are well known from finds in pile dwellings in
Switzerland. One extant fragment from the Neolithic was found in Fayum at a site which dates to
about 5000 BCE. There are many different types of looms, from a simple loom that dates back to
the Vikings, to the standard floor loom.

History during the industrial revolution


The key British industry at the beginning of the 18th century was the production of textiles made
with wool from the large sheep-farming areas in the Midlands and across the country (created as
a result of land-clearance and enclosure). Handlooms and spinning wheels were the tools of the
trade of the weavers in their cottages, and this was a labour-intensive activity providing
employment throughout Britain, with major centers being the West Country; Norwich and
environs; and the West Riding of Yorkshire. The export trade in woolen goods accounted for
more than a quarter of British exports during most of the 18th century, doubling between 1701
and 1770 [1]. Exports of the cotton industry – centered in Lancashire – had grown tenfold during
this time, but still accounted for only a tenth of the value of the woolen trade.

The textile industry grew out of the industrial revolution in the 18th Century as mass production
of clothing became a mainstream industry. Starting with the flying shuttle in 1733 inventions
were made to speed up the textile manufacturing process. In 1738 Lewis Paul and John Wyatt
patented the Roller Spinning machine and the flyer-and-bobbin system. Lewis Paul invented a
carding machine in 1748, and by 1764 the spinning jenny had also been invented. In 1771,
Richard Arkwright used waterwheels to power looms for the production of cotton cloth, his
invention becoming known as the water frame. In 1784, Edmund Cartwright invented the power
loom. With the spinning and weaving process now mechanized, cotton mills cropped up all over
the North West of England, most notably in Manchester and its surrounding towns of Ashton-
Under-Lyne, Stalybridge and Dukinfield.

Textile mills originally got their power from water wheels, and thus had to be situated along a
river. With the invention of the steam engine, in the 1760s to 19th century, mills no longer
needed to be along rivers.

Post industrial revolution


Many of the cotton mills, like the one in Lowell MA, in the US originally started with the
intention of hiring local farm girls for a few years. The mill job was designed to give them a bit
more money before they went back to the farm life. With the inflow of cheap labor from Ireland
during the potato famine, the setup changed, as the girls became easily replaceable. Cotton mills
were full of the loud clanking of the looms, as well as lint and cotton fiber. When the mills were
first built, a worker would work anywhere from one to four looms. As the design for the loom
improved so that it stopped itself whenever a thread broke, and automatically refilled the shuttle,
the number of machines a worker could work increased to up to 50.

Originally, power looms were shuttle-operated but in the early part of the 20th century the faster
and more efficient shuttleless loom came into use. Today, advances in technology have produced
a variety of looms designed to maximize production for specific types of material. The most
common of these are air-jet looms and water-jet looms. Industrial looms can weave at speeds of
six rows per second and faster.

By the later 20th Century, the industry in the developed world had developed a bad reputation,
often involving immigrants in illegal "sweat shops" full of people working on textile
manufacturing and sewing machines being paid less than minimum wages. This trend has
resulted due to attempts to protect existing industries which are being challenged by developing
countries in South East Asia, the Indian subcontinent and more recently, Central America. Whilst
globalization has seen the manufacturing outsourced to overseas labor markets, there has been a
trend for the areas historically associated with the trade to shift focus to the more white collar
associated industries of fashion design, fashion modeling and retail.

Areas historically involved heavily in the "rag trade" include London and Milan in Europe, SoHo
district in New York City, the Flinders Lane and Richmond.

WORLDWIDE MARKET SIZE AND RATE OF


GROWTH
• The global textile market possesses a worth of more than $400 billion presently.

• It is predicted that Global textile production will grow by 25 percent between 2002 and
2010 and Asian region will largely contribute in this regard.

• The global textile sector is worth USD 214.7 billion which represents 14.6% of the
industry value share.

CONTRIBUTION OF ARVIND MILLS IN THE TEXTILE INDUSTRY

Arvind Mills Limited is the flagship company of the US$550 million Lalbhai Group. It
is
engaged in the production of the widest range of textiles. It is the world’s largest
exporter of

denim and Asia’s largest denim producer. Ranking among the top denim
manufactures of

the world, 120 million metres of denim roll out every year from Arvind plants and is
stitched

into leading international denim brands in more than 70 countries. The company is
also in

the garment and mens’ shirting business under the brand names of ‘Newport’,
‘Flying

Machines’, ‘Lee’, ‘Arrow’. . It aimed at manufacturing

high-end superfine fabrics with imported state-ofthe-art machinery.With 52,560 ring


spindles, 2552

doubling spindles and 1122 looms, it was one of the few companies in the early
period of India’s

industrialisation to have spinning and weaving

facilities along with full-fledged facilities for dyeing,

bleaching, finishing and mercerising.

In the mid 1980s the Indian textile industry was

faced with a crisis on account of the power loom

sector churning out vast quantities of inexpensive

fabric which led to many large composite mills

losing their markets.While the company was

operating at its highest level of profitability during

this period, it took a proactive measure to increase

its focus on the international markets to counter

the threat from the power loom sector. In 1988,

the company entered the export market for two

segments, denim for leisure & fashion wear and


high quality fabric for cotton shirting and trousers.

By 1991, the company had become the third largest

producer of denim in the world. The company has carved out an aggressive strategy

to further expand its current operations by setting

up world-class garment manufacturing facilities and

offering a one-stop shop, offering complete

garment packages to its international and domestic

customers.Apart from this, the company with a

host of international and domestic brands like Lee,

Wrangler,Arrow, Flying Machine, Newport, Ruf &

Tuf etc in its portfolio is focusing on becoming the

largest branded apparel company in India.

The Indian promoters hold 37.0 per cent of the

total equity in the company. Foreign institutional

investors, non-resident Indians and overseas

corporate bodies hold 24.4 per cent stake in the

company while the Indian public holds 20.03 per

cent stake. Mutual funds, banks, financial institutions,

insurance companies and private corporate bodies

hold the remaining stake in the company.

SCOPE OF IMPROVEMENT OF COMPANY IN THE INDUSTRY

Looking at the distinctive competencies achieved by Arvind Mills through vertical integration, diversification and
huge capacity setup, the future strategy for Arvind Mills can be described based on strategy development
framework.
Nearly 50% of the Arvind Mills revenue is generated from the exports market. In Europe the capacity build up in
Turkey poses a huge challenge and the countries like Pakistan and Bangladesh are showing as new threats in this
market. Arvind Mills need to defend this market by focusing on process innovation and following a cost player
strategy. Improving its supply chain and inventory management through further tying up with farmers, usage of ERP
system and increase in the plant efficiency with the use of technology are some of the process innovations it should
follow.
Expected competitor response: These moves are implemented by most of the companies as an ongoing improvement
initiatives, thus we don't expect any dedicated response by competitors to most of these initiatives. But the tying up
with farmers is readily visible and is expected to be imitated by other players. Arvind Mills will enjoy a first mover
advantage and by maintaining a better relation this can result in long-term sustainable competitive advantage by
securing quality cotton supplies.

In the exports market it should deepen its base by supplying new products through product innovation like in the
denim category manufacturing ring denim and product mixes with Lycra, which will establish it in new categories. It
should also work on improving its existing client base by following a client development strategy. As most of the
apparel brands in US and Europe are outsourcing manufacturing, further alliance with establish brands will help it
sustain the competitive edge.
Expected competitor response: Competitors will also try to expand its client base. As most of the apparel
manufacturers favor only 2-3 suppliers and follow a long-term relationship there are considerable first mover
advantages here. Arvind mills here have advantage as it has established its credibility and has been successful in
maintaining a long-term successful relationship with some of the big names. It can also leverage its huge capacity.
In product innovation Arvind mills is at disadvantage to its Chinese counterparts who have bigger sales and profits,
which can result in frequent product innovations and faster imitation in meeting the demands.

In the domestic market the growing Indian economy and hitherto explored rural market, provide it with
opportunities to spread its legs. Its strategy to establish itself in two different segments niche and mass market would
help it in capturing these markets. Affordable brands like Newport can be a good start to penetrate the rural market
and the middle class segment in the urban market. While the niche brands like Arrow will cater the needs of the
niche consumers.
Expected competitor response: There is expected to be fierce competitor reaction to this move. With increasing
number of players in urban garments market, players will move and explore the rural market. Established players
like Madura garments already have product range, which it can aggressively market to counter this move.

In the Indian apparel market, retailing and branding was never considered by the Indian garment manufacturers
except by a few major players like Raymond and the woman formal wear section is mostly ignored by the
manufacturers. Arvind Mills through ABL should concentrate on domestic retailing and branding which could give
it higher margins and a brand image, also as the number of working woman in India is increasing, developing the
women formal wear market could give it a significant edge. An established brand will be able to command a brand
loyalty and will give it a sustained competitive advantage. By building prime locations brands can be further
exploited while giving additional competitive advantage.

Expected competitor response: Competitors are already following this strategy and with expanding urban markets,
higher incomes, mall mania, increased fashion awareness and acceptance there is expected to be increased
investments in branding and retailing. Thus the competition is expected to be fierce, but Arvind Mills through its
Arvind Brands Ltd. has slight advantage. In the women's formal wear Arvind Mills can create a separate market
segment. An established women's brand will drive brand loyalty and give it a sustained competitive advantage.

3: PROFILE OF THE ORGANISATION:

HISTORY OF THE ORGANISATION

NATURE OF THE BUSINESS

VISSION AND MISSION OF THE COMPANY

ORGANISATION STRUCTURE

4: KEY COMPETITORS OF ARVIND MILLS

Raymond India
Incorporated in 1925, the Raymond Group is an Rs.1400 crores plus company. Raymond Textile is India's leading
producer of worsted suiting fabric with over 60% market share. It has developed a strong domestic distribution
network and eyes the retail side of the textile industry. The company has become a supplier to several Japanese
manufacturers to de-risk their fluctuations in sourcing from China. It has also invested in increasing its production
capacities by setting up new manufacturing units and has upgraded its technical facilities to world-class levels. Its
continual investments in company owned outlets have resulted in unmatched size of over 300 in numbers.

Welspun India Ltd


Welspun India Ltd, flagship of the Rs.2000-crore. It is entering into the cotton farming business, which would be
done under typical contract farming model, and it has already discussed the new business model with state
governments. The new towel and sheeting facility at Anjar in Kutch district, is expected to cater to the increased
demand from the exports markets. It is planning to invest heavily in opening exclusive 'Spaces' stores across the
country. It is aiming at opening of 20 such concept stores during next one year. The stores would be owned and run
by Welspun domestic retail division and would function as independent profit centers.

Alok Industries
Established in 1986 Alok began with texturising of yarn and steadily expanded into weaving, knitting, processing,
home textiles and readymade garments. Alok also controls an extensive embroidery operation through its sister
concern, Grabal Alok Impex Ltd. Alok has grown to become a diversified manufacturer of world-class home
textiles, apparel fabrics, garments and polyester yarns selling directly to manufacturers, exporters, importers,
retailers and brands the world over. With the sales turnover of around Rs.1250 crore in F.Y. 2004-05, Alok is
amongst the fastest growing vertically integrated textile companies in India. It has plans to invest Rs10bn for
doubling its capacity.

Indian Rayon
Indian Rayon and Industries Limited, a flagship company of the Aditya Birla Group, is among India's top 25
corporations with a turnover of over Rs.15.26 billion. Indian Rayon is a leader in its key businesses - Viscose
Filament Yarn, Carbon Black, Insulators and Branded Apparels - both in India and internationally. The company
enjoys a good brand image with power brands such as Louis Phillipe, Van Heusen, Allen Solly and Peter England to
its credit. The division can leverage on its relationship with international players such as Tommy Hilfiger, GAP and
Banana Republic. It has a marketing budget of 12.5% of sales and has plans of investing Rs6 bn for capacity
expansion and upgradation.

Gokaldas Exports
Gokaldas exports was established in 1979, in Bangalore, India. It has 48 fully equipped, modern, manufacturing
factories, all based in Bangalore. It has a capacity to produce and export 2 million garments a month and a full-
fledged in-house design team creating and developing exciting collections each season. It has plans to expand by
setting up capacities in Hyderabad, Mysore and Chennai (SEZ).

Chapter 2
COMPANY ANALYSIS:

1: CURRENT ISSUES OF THE COMPANY

In past few years Arvind Mills has emphasized on de-risking its business model and the strategy of verticalization.
Following are the steps taken by Arvind mills, which are important for the improved company performance.
*<Tab/>De-risking the business model: Arvind mills foray into shirtings, garments and knitting business have
helped them in reducing their dependence on the denim production. Even though 60% percent of revenue of Arvind
Mills is still generated from the denim, other product businesses are improving and have stabilized their revenues.
Considering the last quarter's performance, though Arvind Mills revenue decreased by 4%, it was mostly due to
reduced denim volume and price realization, but the other products growth improved during the same period.
*<Tab/>Setting up new capacities: Even though this move was a prime reason behind the heavy debt Arvind Mills
incurred during late 90s, this also made them one of the world's biggest denim producers with latest technologies.
With denim capacity of over 100 million meters, Arvind Mills enjoy the competitive advantage with low costs and
economies of scale.
*<Tab/>Integration: Arvind Mills planned to move up in the value chain by investing in the garmenting sector. The
strategy of developing its own brand and licensing of top foreign brands gave it vital presence in the garmenting
sector. With the acquisition of Arvind Brands Ltd. In 2005 from ICICI, Arvind Mills is now focusing on re-vitalize
its brands. It also focused on the easy procurement of the key raw material cotton by tying up with the big farmers.
This move helped them in managing their inventories in a better manner and also reduced risk against the price
fluctuations.
*<Tab/>Product Mix Diversification: In the garmenting sector, Arvind Mills launched its products in two segments
one eyeing at the niche segment with licensed brands like Arrow and another at the mass market segment with
affordable brands like Newport, which it wants to make the leader in the mass segment.

The value creation by a firm is a function of resources and competencies available to a firm. Arvind mills created
extra value through the large capacities and gained sustainable advantage through vertical integration. The foray into
garmenting (including branding and retailing) was backed by strong integrated chain, which provided it with the
significant edge over others. Alliances with foreign brands like GAP, Tommy Hilfiger etc kept its revenue stream
flowing thorough the exports market. The tying up with farmers, process innovation and the integration are the key
in cutting down the costs.

2:PEST ANALYSIS

3: PORTER’S 5 FORCE MODEL

4: SWOT ANALYSIS

5:USP
Chapter 3
MARKETING STRATEGIES

INTRODUCTION AND IMPORTANCE OF MARKETING STRATEGIES

Marketing strategy[1][2] is a process that can allow an organization to concentrate its limited resources on the greatest
opportunities to increase sales and achieve a sustainable competitive advantage.[3] A marketing strategy should be centered
around the key concept that customer satisfaction is the main goal.

Marketing strategy is a method of focusing an organization's energies and resources on a course of action which can lead to

increased sales and dominance of a targeted market niche. A marketing strategy combines product development,

promotion, distribution, pricing, relationship management and other elements; identifies the firm's marketing goals, and

explains how they will be achieved, ideally within a stated timeframe. Marketing strategy determines the choice of target

market segments, positioning, marketing mix, and allocation of resources. It is most effective when it is an integral

component of overall firm strategy, defining how the organization will successfully engage customers, prospects, and

competitors in the market arena. Corporate strategies, corporate missions, and corporate goals. As the customer constitutes

the source of a company's revenue, marketing strategy is closely linked with sales. A key component of marketing strategy

is often to keep marketing in line with a company's overarching mission statement.[4]

Basic theory:

1. Target Audience

2. Proposition/Key Element

3. Implementation

A marketing strategy can serve as the foundation of a marketing plan. A marketing plan contains a set of specific actions

required to successfully implement a marketing strategy. For example: "Use a low cost product to attract consumers. Once

our organization, via our low cost product, has established a relationship with consumers, our organization will sell

additional, higher-margin products and services that enhance the consumer's interaction with the low-cost product or

service."
A strategy consists of a well thought out series of tactics to make a marketing plan more effective. Marketing strategies

serve as the fundamental underpinning by marketing plans designed to fill market needs and reach marketing objectives.
[5]
Plans and objectives are generally tested for measurable results

Importance of Developing a Marketing Strategy Plan


A business idea usually stems from creating a product or service as a solution to a problem and filling an
existing unmet demand. Every business success plan requires a marketing strategy. Certain elements of a
business need to be researched before launching the initial business venture.

Not all businesses are alike, so a marketing strategy that works for one business may not necessarily work for
the other. Therefore, every business has to create a marketing strategy that is specific to its audience, product
and service.
Market Research
1. One of the main reasons for researching the market is to find out what is current, what the future holds
and how to create a strategy for success. A marketing strategy allows you to use market research you
have collected to send a clearer message to your targeted prospects that shows them that you know
what they want. Pursuant to the market research, a marketing strategy helps a business to identify,
package and showcase all the benefits of the product and services to the prospect.
Creating Tactics
2. A marketing strategy allows you to create tactics better than those of your competition. You
would study the competition through market research to find out what is being done and how you can
do it better. You will be able to develop your own innovative techniques that give you an edge over
your competitors who may have been in the market longer than you have and have not revised their
marketing strategy to fit the current changes in the market.
Communication
3. Without customers, a product or service cannot exist for long. A marketing strategy helps a business to
reach its targeted audience. It allows the business to effectively communicate to the prospective
consumer. It is a way to announce and inform the public of a product or service and show consumers
how they will benefit from what you are selling.
Opportunties for Market Positioning
4. A market strategy will provide opportunities to position your business in the marketplace, which means
that since you cannot be all things to everyone, you can commit your product or service to a small
group of people in an attempt to create a brand. You will be able to better examine the response to
your strategy and be able to fine-tune it by possible conducting surveys using those same small
groups.
Sustaining a Business
5. A marketing strategy will contribute to the sustenance of a business even during market volatility,
market changes and economic downturns. You will be able to measure your success better when
there is an implemented strategy. It also allows you to be more customer-focused, be able to create a
unique selling point and value as well as to remain consistent and goal oriented.
MARKETING MIX: ARVIND MILLS

STP ANALYSIS:

BCG MATRIX

Chapter 4
1: SOURCES OF FINANCE

2: KEY INVESTMENTS

3: RATIO ANALYSIS
Chapter 5
HR POLICIES AND STRATEGIES

1: SOURCES OF RECRUITMENT

2: PROCESS OF RECRUITMENT

3: TRAINING AND DEVELOPMENT PROGRAMME

4: BENEFITS AND COMPENSATION PROCESS


Chapter 6

PRODUCTION POLICIES
1: PRODUCTION PROCESS

2: PRODUCTION LAYOUT

3: KEY SUPPLIERS

4: KEY CUSTOMERS

5: QUALITY CONCEPTS
Chapter 7

Recommendations
*<Tab/>Based on the above discussion on the future strategy, we suggest Arvind Mills to follow Defend, Deepen
and Develop strategies. Arvind mills derive its competitive advantage by being an integrated manufacturer, so we
recommend that it should leverage its competitive advantage by following a cost leadership strategy in fabric
segment and differentiator strategy in garment segment.
*<Tab/>By following the discover strategy the investments in supply chain and retail network developments will be
high whereas the rural offerings and products have low margins. But in case if other players move into the
development of rural market, we suggest that Arvind Mills should follow them. As this market does not provide
significant first mover advantage, it's better to follow wait and watch approach.
*<Tab/>We suggest Arvind Mills to go for product brand strategy instead of going for store brand in the domestic
market. Due to new entrants in garment manufacturing, the price margins would be reduced for the store brands. In
case of the product brands, a single hit product will give them a significant advantage in the market. While we agree
that a store brand will give a consistent source of revenue and ensure less risk, but the brand owners will capture the
value. Arvind Mills already have licensed brands from the global players, so it can leverage the existing retail and
supply chain networks. It should launch its own brands in categories where there are no players (pushing Newport as
mass brand), avoiding direct competition with the licensed brands.
*<Tab/>Arvind Mills should continue to focus on product and process innovation. A fixed portion of the sales
should be set-aside for R&D. It should develop design capabilities by tapping the talent pool from reputed institutes
like NID and NIFT's. It should also tie-up with fashion houses to keep pace with the fashion trends and developing
its in-house design capabilities.