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Presented by
Manish Kumar
Manish Rajpurohit
Type Public (NSE, BSE)
Founded 1931
Headquarters Ahmadabad
Sanjay Lalbhai (CEO &MD)
Key people
Arvind N. Lalbhai
Industry Textiles
Products Denim, Knits, Khakhis
Revenue Rs 20 billion
Website http://www.arvindmills.com/
Concept
The Textile industry (also known 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
Sector Synopsis
With a total market size (2004-05) of US$ 38 billion, the textiles domestic market
comprises US$ 25 billion and exports US$ 13 billion.
The textile industry functions in the form of clusters (roughly 70 in number) across
India, producing 80 per cent of the country’s total textile
It is diverse, with the hand-spun and hand woven sector at one end of the spectrum,
and the capital intensive, sophisticated mill sector at the other.
In Indian economy, the textile industry plays a significant role. It provides direct
employment to approximately 35 million people and contributes 4 per cent of
GDP. It fetches 35 per cent of gross export earnings and contributes 14 per cent of
the value-addition in the manufacturing sector.In textile sector,there are various
industries which contributes in the Indian economy in which main industries are:
Large industry conglomerate, with turnover of USD 279 million and
presence in textiles, retail, engineering goods, personal care and
prophylactics
Textile products - worsted fabrics, wool and blended fabrics, specialty ring
colour and stretch denim fabric, cotton and linen shirting fabric, readymade
garments, woolen blankets and home furnishings
One of the oldest textile companies in the country, having turnover of USD
231 million
Produces suitings, shirtings, sarees, towels, bed linen and men’s apparel;
significant exporter of polycotton blended fabrics and made ups
One of the largest textile business houses in India, having turnover of USD
400 million
Supplies to more than 100 retailers and fashion brands across 39 countries
Belongs to one of the most diversified business groups in India (Aditya Birla
Group) and has turnover of USD 577 million)
Key products in textiles include viscose filament yarn and branded apparel;
other interests include insurance, telecom, IT, carbon black
Leading producer of silk yarns and fabric (mainly for decorative and bridal
use), with annual turnover of USD 32 million
Amongst the top 3 terry towel producers in the world, with annual turnover
of USD 132 million
Has the largest composite textile mill in India for producing cotton fabric
Having a turnover of USD 95 million, its products include viscose filament
yarn, viscose tyre/ industrial yarn, denim, cement and pulp and paper
Arvind also owns and operates India’s largest 70 outlet strong value retail chain
‘Megamart’. The branded apparel and retail business of the company has returned
yet another quarter of solid performance. Sales grew by 40% and the EBIDTA has
grown by 187% during the current quarter. The company added another 50 doors
during the current quarter. The first MegaMart Outlet Centre, the company’s value
apparel retail store measuring about 40,000 square feet was opened to public in
Chennai on the 23rd January 2008.
India is one of the leading producer of cotton, goatskin and cashmere wool. It
ranks top in goatskin and third in cotton after China and United States. The fabric
industry in India accounts for about 20% of total exports of the country and
represent the largest net foreign exchange earner
Company Profile
History
In the mid 1980’s the textile industry faced another major crisis. With
the power loom churning out vast quantities of inexpensive fabric,
many large composite mills lost their markets, and were on the verge
of closure. Yet that period saw Arvind at its highest level of
profitability. There could be no better time, concluded the
Management, for a rethink on strategy. The Arvind management
coined a new word for it new strategy – Renovation. It simply meant a
new way of looking at issues, of seeing more than the obvious and
that became the corporate philosophy. The national focus paved way
for international focus and Arvind’s markets shifted from domestic to
global, a market that expected and accepted only quality goods. An in-
depth analysis of the world textile market proved an eye opener.
People the world over were shifting from synthetic to natural fabrics.
Cottons were the largest growing segments. But where conventional
wisdom pointed to popular priced segments, Renovation pointed to
high quality premium niches. Thus in 1987-88 Arvind entered the
export market for two sections. Denim for leisure and fashion wear.
And high quality fabric for cotton shirtings and trousers. By 1991
Arvind reached 1600 million meters of Denim per year and it was the
third largest producer of denim in the world.
Board of Directors
OTHER DIRECTORS
Mr. S. R. Rao (Nominee of EXIM Bank)
Looking ahead…
At the current price level of Rs 119, the stock trades at a P/E multiple 23.4 times
annualized 9mFY05 earnings.
The abolition of the quota system from the start of this year promises to be very
challenging for the Indian textiles and apparel industry. The industry is projected to
achieve a size of US$ 85 bn by the year 2010 with exports of US$ 40 bn. However,
this is easier said than done, as Indian textiles have to compete with lower costing
products from China, Sri Lanka, Bangladesh and even Pakistan.
Going forward, Arvind Mills with its vertically integrated set-up is poised to
capitalize on the immense opportunities available for export growth post the quota
system and has already undertaken steps to increase its production capacity.
However, an appreciating rupee albeit at a slower pace, volatile cotton prices and
cyclical nature of denim which has assumed the nature of a commodity are the
downside factors to be considered.
Company Strategies
The company's poor financial health in the late 1990s. In the mid
1990s, Arvind Mills' undertook a massive expansion of its denim capacity in spite
of the fact that other cotton fabrics were slowly replacing the demand for denim.
The expansion plan was funded by loans from both Indian and overseas financial
institutions. With the demand for denim slowing down, Arvind Mills found it
difficult to repay the loans, and thus the interest burden on the loans shot up. In the
late 1990s, Arvind Mills ran into deep financial problems because of its debt
burden. As a result, it incurred huge losses in the late 1990s. The case also
discusses in detail the Arvind Mills debt-restructuring plan for the long-term debts
being taken up in February 2001.
Arvind Mills’ strategy and Programmes for its “Corporate Social
Responsibility”
Mr Sanjay Lalbhai, Arvind Mills’ Managing Director has laid the foundation of the
company’s approach for its “Corporate Social Responsibility.” The organisations
that the company has created for carrying out the programmes for its “Corporate
Social Responsibility”, build their programmes on this foundation. The SHARDA
Trust, and the Narottam Lalbhai Rural Development Fund (NLRDF) are the
company’s two arms for carrying out the Programmes for its “Corporate Social
Responsibility.” Therefore, to appreciate the Programmes of these two
organisations, it is essential to grasp the foundation of these Programmes.
This view of ‘CSR’ is based on our conviction that corporations and society are
interdependent. Though distinct, they are not mutually exclusive. They exist
together and function together. Social issues affect corporations and the
corporations’ actions in turn affect the society.
Obviously, no corporation can address all the societal issues. It has to make a
choice about the societal issues it would address; still more important is the
decision about the issues to be left for other organisations to resolve. How should a
corporation make its choice? A good criterion for doing so, is what Professor
Michael Porter calls the ‘shared value’. This suggests that a corporation should
address only those societal issues that would create benefit for the society and the
corporation both.
Once we accept the view that corporations and the society must exist together and
work together, the debate whether corporations should accept ‘Social
Responsibility’ becomes futile. Social Responsibility then gets integrated with the
corporation’s total
functioning—results in what Professor Porter calls ‘corporate social integration’.
Translating ‘CSR’ into ‘corporate social integration’ would result in corporations
treating ‘CSR’ as an integral part of its strategy and stop treating it as an act of
philanthropy.
4. Trust’s Programme for helping the urban poor, get secondary and
tertiary health care
Global existence
Top 10 buyers in India (Gap, Wal-Mart, Li & Fung, The Children’s Place,
JC Penny, H&M, Federated, Fifth Avenue, Carrefour and Synergies India)
account for 35% of total textiles sourced from India
Other major companies include El Corte, Ecko, Kellwood, VF Corporation,
Tesco, Next, Karstadt-Quelle
VF Arvind Brands - joint venture between Arvind Brands and VF
Corporation to manufacture and sell latter’s brands in India
PHILOSOPHY
THEY BELIEVE
In people and their unlimited potential.
In content and focus in problem solving.
In teams for effective performance.
In intellect & its power.
THEY ENDEAVOUR
To select, train and coach people to obtain higher responsibilities.
To nurture talent to build leaders for tomorrow's corporation.
To reward, celebrate and activate all intellectual business contributions.
THEY DREAM
Of excellence in all endeavors.
Of mutual benefit and prosperity.
Of making the world a better place to live in.
We Make Things Happen
Achievements
By 1991 Arvind reached 1600 million meters of Denim per year and it was
the third largest producer of denim in the world.
Arvind took its place amongst the foremost textile units in the country.