A Case Study

on
Arvind Mills in the Era of WTO

Kapish Gaba
Parul Verma
 Arvind Mills:
• 1930-Set up with an initial investment of 25lacs.

• 1980-Coined in the term “Renovision”

• 1987-Started aggressive expansions all over the country.

• 1998-Worlds 3rd largest Denim producer.

• 1998-First Asian company to implement SAP ERP.

• 2001-Major debt restructuring.

• 2003-On the front end once again.

 Multi Fibre Agreement

• Signed in 1974 restricting the imports of textiles through licensing in

global market.

• Developed countries invested heavily in capital intensive techniques of

production.

• The effect on developing nations was augmented by limiting of textile

imports by US and European countries.

• MFA replaced by Agreement on Textile and clothing on january1, 1995.

 Opportunities for Arvind Mills

• The Post-quota Market.

• Labor cost advantage.

• Cheap cotton.

• Government promoting large investments on modernization.

 Internationalization
PHASE 1-
• Full fledged entry into Denim manufacturing.

• In 1995 faced a setback due to increase in cotton prices, but still continued
expansion.

• Finally became worlds 3rd largest manufacturer.

• Had to sell its real estate in Delhi responding to excess supply of denim in
market hampering profitability.
 Phase 2-
• Post-restructuring era company turned around again within 2 yrs.

• The high quality standards and cautious raw material purchase got them
clients like-
» Arrow
» Lee
» Wrangler
» Tommy Hilfiger

• They also started there own product range-

» Newport
» Ruf and Tuf
» Flying machine
» Excalibur
 Key Strategies:

• High quality/Low cost

» ISO 14001 certification (First in Asia)
» Implementing ERP (1997)
» Got accredited from companies like (Dupoint, Marks & Spencer, Nike
and others…)
• Global sourcing

• Business Divisions
» Fabric division
» Garment export division
 Case Questions?
1. Benefits to Arvind Mills from removal of QR

– Got great opportunities for exports to developed countries.

– Its Low cost and High quality was internationally accepted.
– Production and raw material purchasing standards gave it an edge over
others.

2. Plans and strategies implemented by Arvind Mills to recover from debt

in 2001
– Sold real estate in Delhi.
– Kept a check on quality.
– Tied up with various multinational brands.
– Divided business model in two subheads to its own benefit.