Case study on The denim war will Arvind come out a winner

Under the guidance of Dr.R. venkatesh

Submitted by:
Sunit Mishra Mandvi gupta Abhinav Sharma Jeetu Jose Bhaskar Thakur

the domestic market is expected to reach US$60 billion and India s share of global textile exports is expected to increase from 4% to 7%. finishing and mercerizing. With the aim of manufacturing the high-end superfine fabrics Arvind invested in very sophisticated technology. Narottambhai and Chimanbhai decided to put up a mill to produce superfine fabric. It provides employment to 38 million people and thus. is the second largest employment provider after agriculture. 2552 doubling spindles and 1122 looms it was one of the few companies in those days to start along with spinning and weaving facilities in addition to full-fledged facilities for dyeing.560 ring spindles. bleaching. In this span of three years. The Indian Apparel & Textile Industry is one of the largest sources of foreign exchange flow into the country with the apparel exports accounting for almost 21% of the total exports of the country. With 52. Steadily producing high quality fabrics. According to the textile ministry. And a company called Arvind Mills was born in 1931. Indian textile market is expected to reach US$115 billion by 2012. Kasturbhai.Introduction: This article deals with an analysis of the Indian textile industry and the strategies applied by Arvind mills for their future growth perspectives. Currently the Indian textile and apparel is US$62 billion out of which US$22 billion is contributed by exports and the rest US$40 billion is by the domestic market. Arvind took its place amongst the foremost textile units in the country. Breif History of Arvind Mills The three brothers. . The Indian Textile industry adds 14% to the industrial production and 8% to the GDP of India. year after year.

Section A Tows analysis of arvind mills THRE TS E LINE IN INDIAN TEXTILE EX ORT BY 13% RISE IN RAWMATERIAL RICES WEAKNESS INEFFICIENT RODUCTION ROCESS FINANCIAL WEAKNESS PRESENCE ACROSS THE TEXTILE VALUE CHAIN. OU TRIES LIKE DEMAND IN DOMESTIC MARKET VALUE IN INDUSTRISL WEAR SEGMENT VALUE IN DOMESTIC GARMENT RETAIL MARKET. This segment has a constant requirement. Decline in exports There has been a decline in the exports to US and Europe due to recession by 13% in 2009. ESTABLISHED DOMESTIC BRANDS AND LICENSED INTERNATIONAL BRANDS. ¦¦   O URTUNITIES £ ¤ ¡¥ ¡ £¢ ¡ . To overcome this threat § £ £ ¤ £ ¡¢ O ETITO FRO HINA. Competition from global players: It is largely believed that china will be the largest beneficiary of No Quota regime. This has an impact on the business of arvind mills. According to Mickinsey. Stratergies to convert threats and weakness to strengths and oppurtunities. TOWS STRENGTH HIGH RODUCTION CAPABILITIES. china will garner 50% exports. China currently has 17% -18% global market share which is a threat to Indian textile industry and arvind mills. 1. To overcome this threat arvind mills has plans to export for industrial wear segment of US$ 3 billion dollars. 2.

3 industry standard. Financial Weakness Due to wrong strategic decisions the Arvind mills has suffered financial crises in the late 1990 s. Arvind mill promoters are increasing their investment from 34% to 47% which make the firm financially stable. Excalibur and Ruf & Tuf. The liquidity ratio of the firm was 2. This focus has ¨ . Tommy Hilfiger and Arrow along with its domestic brands. 3. Inefficient production process The inefficient production process of arvind mills has put arvind mills in financial crises in the past hence the company has started working on stream lining the production process 2. ee. The textile business is likely to become one of the largest apparel brand in India. The domestic brands of the apparel franchise include Newport. The Arvind Mills franchise had formulated an aggressive strategy to streamline its current operations by setting up top scale garmenting facilities and providing services through a one-stop shop by offering garment packages to all its international and domestic customers.25 when compared to 1.arvind mills has started its retail chains in the domestic market(Megamart) to capitalise the domestic market which has seen a growth of 35% in 2008 -09. Flying Machine. Weakness 1. Section B Strategies of Arvind Mills to become Market leader 1. Rise In raw material prices To over come the rise in raw material prices arvind mills has its presence across the textile value chain. with its international licenses for Wrangler. The Arvind Mills franchise has been a pioneer in changing customer demands for textiles across the globe and it has focused on selecting core products.

limiting the amount of imports to countries whose domestic industries faced serious challenges from rapidly increasing imports. With the presence of the Arvind Mills franchise across the textile value chain. This diversification is beneficial as the demand for this segment is necessity and hence is not volatile like the retail market. MFA restrictions are normally prohibited under World Trade rganization (WTO) rules and must have been phased out by 2005. and has been a established national player. The MFA regime served to protect newly industrialised countries like © ©  . 2. The industrial wear segment is a US$ 3 billion dollars market globally. The strategy of concentrating on the domestic market along with the international market may work out to be rewarding for the company as it has a good portfolio of domestic and international brands. it endeavours to be a one -stop shop for all the leading garment brands. The expiration of the MFA did not. History : The aim of the Multi-Fibre Agreement (MFA) was to allocate export quotas to low -cost developing countries. The company has changed its name from Arvind Mills td to Arvind td with a new logo and identity to reflect a company which is diversified with focus on branded apparel and retail. mean the end of quotas on textile and clothing exports from developing countries.enabled the textile business to play a dom inant role in the world textile arena. Definition International trade agreement under which two countries may negotiate quota restrictions on textile and apparel imports from each other. however. 3. The move also helps it to ward off any risk it faces from the recession in export markets. Section C What is multifibre agreement and how did it affect the textile industry. Arvind mills have plans of catering to the industrial wear segment.

Taiwan and Hong Kong that have now become non -competitive due to substantial increases in domestic wages. Since quotas provide an absolute rather than a relative measure of protection. they immunised to a large extent against the downward pressure on prices that other countri es increasing competitiveness and generally low-cost base brought with them. has been negatively affected by the global recession. and the concurrent dispersion of production in quota unconstrained locations. The two key outcomes with regard to geographic location have been the protection of production centr es in quota-imposing countries. technical attributes and fashion elements. Implications : Trade-restricting quotas on textiles and clothing have changed the global nature and location of production.Korea. which were allowed to flourish. like many other sectors. Quotas also helped drive a much broader worldwide dispersi on of the sector than would have taken place otherwise. Quotas therefore played a key role in preserving and expanding the sector in the countries such as the US. Protectionist measures ensured the continuation of an incentive for the sector to operate in an environment characterised not merely by low input costs. customers have been spending less on clothing including jeans and other denim apparel. Section D Present position of the jean industry The global US$55 billion denim fabric industry. and the EU. the demand for denim . but also by other competitive factors such as design. An absence of quotas would in all likelihood have lead to higher concentrations of textile and clothing produ ction centres in a small number of low-cost destinations. Faced with rising unemployment and falling household incomes. As a result. mainly the United States and Europe.

000 crore in the next three years.  . the prospects for denim fabric exporters in 2010 will improve provided world economic growth can be maintained.fabric fell. The current demand for denim from Bangladesh stands at 280 million meters a year and is growing 25 per cent annually. There has been an considerable increase in the demand of personalised jeans started by levi s.200 crore in F 10 to Rs 4. However. Arvind expects revenues from the textile business to increase from Rs 2. Hence the concept of mass customization and introduction of new styles can help the jeans market.

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