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ARVIND MILLS

LIMITED

Arvind Mills is India's largest and the world's third
largest denim manufacturer.

Background

Arvind Mills Ltd. (AML), the flagship company
of the US$ 500 million Lalbhai Group, was
incorporated in 1931. It aimed at manufacturing
high-end superfine fabrics with imported state-of-
the-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 The company has carved out an aggressive strategy
industrialisation to have spinning and weaving to further expand its current operations by setting
facilities along with full-fledged facilities for dyeing, up world-class garment manufacturing facilities and
bleaching, finishing and mercerising. offering a one-stop shop, offering complete
garment packages to its international and domestic
In the mid 1980s the Indian textile industry was customers. Apart from this, the company with a
faced with a crisis on account of the power loom host of international and domestic brands like Lee,
sector churning out vast quantities of inexpensive Wrangler, Arrow, Flying Machine, Newport, Ruf &
fabric which led to many large composite mills Tuf etc in its portfolio is focusing on becoming the
losing their markets.While the company was largest branded apparel company in India.
operating at its highest level of profitability during
this period, it took a proactive measure to increase The Indian promoters hold 37.0 per cent of the
its focus on the international markets to counter total equity in the company. Foreign institutional
the threat from the power loom sector. In 1988, investors, non-resident Indians and overseas
the company entered the export market for two corporate bodies hold 24.4 per cent stake in the
segments, denim for leisure & fashion wear and company while the Indian public holds 20.03 per
high quality fabric for cotton shirting and trousers. cent stake. Mutual funds, banks, financial institutions,
By 1991, the company had become the third largest insurance companies and private corporate bodies
producer of denim in the world. hold the remaining stake in the company.

Company Products Established Founder Distribution Production plants

Arvind Mills Fabrics and 1931 Lalbhai Brothers Europe, US, India
Ltd. Garments West Asia,
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when it faced rising interest costs because vertically integrated denim plant ranks amongst of high level of borrowings. Apart from the fabrics and garments segments of the textiles this. The company is one of the leading players in the which is evident from its return on capital employed domestic ready-to-wear garments segment. the other raw material prices as well as depressed denim company sold denim worth about US$ 234 million. Its khakis are also becoming popular in during the period 1999 to 2005 at CAGR of 10. it is present in both the for the upswing in the company’s profitability in the domestic and international markets for formal and last 3 years. Own brands include Flying Arvind Mills has over the years become a force to Machine. Since than. Its Knits division serves some cent. volatility in cotton and the most modern in the world. it has become The company’s top line and bottom line have been world’s third largest manufacturer of denim with a highly volatile in the past.The company managed to turnaround from 2002 onwards by Arvind Mills has been one of the leading textile undergoing financial restructuring which helped in producers in India.6 per cent in the process of ramping up the capacities to cater to reach US$ 177 million in 2005. 20 . Profit after tax has to the increasing demand.6 per the export markets.1 per cent in 2005. In 2005. and Tommy Hilfiger (fashion). shirting. khakis. Lee (jeans). increased manufacture include denim. Exports have grown at a CAGR of 8. capacity utilisation and control on sourcing of cotton knitwear and voiles. Newport and Ruf & Tuf in jeans and reckon with in the entire textile value chain. Arvind (formals and casuals). In fabrics. Its own Arvind Mills’ contribution in making brands are managed by its subsidiary Arvind Brands ‘Made in India’ global Limited and are marketed in India and some neighbouring countries. Its and 2002. is ranked amongst the best in the world. The company achieved a higher capital efficiency. Denim contributes more than and other raw materials to reduce procurement 60 per cent to the company’s turnover.The Excalibur in shirts. Licensed brands include Arrow yarn manufactured by one of its subsidiaries. casual clothing. The company has a strong foothold in the international markets for denim fabric.own as well as international ones (under license from the respective companies). It has (ROCE) of 9.These changes have been largely responsible garments segment. brands . Denim division to market denim fabric in international markets. with gross sales reaching US$ 389 million in of the best brands in the world and the company is 2005. the items of of improved product and customer mix. which was better successfully launched and established multiple than the textiles industry’s ROCE of 7. grown at a much higher CAGR of 43 per cent in the same time period owing to improved market Arvind Mills' major change in market focus came conditions. particularly between 1999 capacity of 110 million metres per year. Products and brands prices in the international markets.The company is present in both substantial reduction of interest cost. the company also followed a disciplined strategy industry value chain. better price realisations and lower about in 1987 when the company established its financial expenses especially in the last three years. Many Financial Analysis varieties of the shirting fabric manufactured by the company sell at a premium in international Arvind Mills has witnessed a growth in gross sales markets.3 per cent.Wrangler (jeans) Cotspin. In the costs.

The presence in the international knitwear and khakis company has its own dedicated teams of designers in markets also. company has focused on producing the highest quality of products. USA. specialises in apparel manufacturing and technical consultancy.The company offers one of the world’s most comprehensive range of knitwear products for The company has a major presence in the renowned garment brands and retailers of the international premium shirting market and has a world. which million metres per year. 21 . Till mid 1980s. Most of the output from this factory In order to strengthen its international presence.The Factors fuelling Arvind Mills’ shirting division has an in-house design studio with global initiatives a team of qualified professional designers.The plant has a capacity of 33. The knitwear division is a part of the its various offices who work in close co-operation ‘multi-product textile facility’ set up at Gandhinagar with international designers based in Italy. of and Asia Pacific.The plant has an integrated regular basis. including designers based in Italy and UK. both fabrics and garments. manufacturing facility from yarn to finished fabrics under one roof to produce world-class quality. capacity of 4.5 collections annually.The plant has an annual in international markets.This factory has been the company has become the world’s third largest put up in technical collaboration with an Italian manufacturer of denim with a capacity of 110 apparel consultancy firm. US. the company has a major incorporating the latest designs at the same time.majority of which was sold in more than 70 (Gujarat) with an investment of US$ 50 million in countries in Europe. the is being exported to USA and European markets.5 million pieces. Its The company has a state-of-the-art garment major change in strategy came about in 1987 when manufacturing plant at Bangalore (Karnataka) to the company established its Denim manufacturing manufacture shirts and tops primarily for the division with the primary aim of marketing denim international markets. while Apart from the above.The khakis division of the company is the modern shirting plant to manufacture high value only one in South East Asia to launch two cotton shirting.West Asia. In the last two decades.The in-house product million yards per year and the company is one of development team co-ordinates with European the largest exporters of premium shirting fabric designers to prepare the new collections on from India. Arvind Mills’ focus was more on marketing its products in the domestic market. CF ITALIA. the Far East technical collaboration with Alamac Knits Inc. UK etc.

arvindmills. which are • Independent design teams working with the major importers of all types of garments. knits and setting up world class manufacturing facilities. the company’s exports. sales. As denim already accounts for about 60 per cent of the company’s gross sales. which already with the global retailers by increasing value added account for more than 45 per cent of its gross products in its portfolio. The company is focusing on optimising the product mix for all its divisions to further improve the performance of each division. India international designers for latest designs is expected to be one of the biggest beneficiaries • Technical collaborations for high quality products of this development as additional garment production moves to countries like India. Its woven garments unit for have increased focus on high value added garments example has been set up in technical collaboration in both existing and new geographies.The company also plans to domestic customers. cotton The company plans to renew its focus on the shirting. the company sometime now by using one of its subsidiary has continuously expanded its product portfolio companies 'Arvind Brands Limited' as a platform. Arvind Mills has been In order to capture the maximum market share making efforts to capitalise on this opportunity for globally and to create new markets. CF ITALIA.This has • World’s third largest denim manufacturer opened up all the big garment markets in the world • Presence in more than 70 countries including the European Union and USA. Future plans Globalisation at a glance The ATC ceased to exist from 1st January 2005 • World class manufacturing facilities catering and with that the quota system between member to the best brands in the world states of the WTO also came to an end. Arvind www. As part of this. khakis. Under this brands as well as developing closer relationships scenario. which khakis are being focused on to achieve a more offer complete packages to its international and balanced product mix. the company has adhered to the product risks by reducing dependence on only its aggressive strategy to expand its operations by one product. of USA. it is trying to spread Apart from the above. shirts/tops. knitted garments etc to domestic branding and retailing of its own apparel market them in international markets. with the Italian apparel consultancy firm. turning out to be a major force impacting the domestic apparel sector. shirting. are set to increase further in the future. which is being done by emphasising on the high value added products. Mills is already in the process of increasing its capacities for various products and also tying up for outsourcing opportunities to take advantage of the changing market dynamics. and manufactures denim fabric and jeans. while its Knitwear garments unit has been Branded apparel consuming class in India is set up in technical collaboration with Alamac Knits expanding at a CAGR of 11 per cent and this is Inc.com 22 .