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Arvind Mills

Background: Flagship of the Lalbhai group (Rs.20 billion) Incorporated in 1931 2nd largest producer of Denim in the world after Cone Mills Dominates local denim market with nearly 60% market share

Business: Manufacturing and marketing of o Cotton textile fabrics (denims, shirtings and knit fabrics) o Cotton yarn o Knit garments Business Mix o Denim - 61% o Shirting - 20% o Yarn - 9% o Knits - 5% o Others - 5% Has 7 plants spread over 4 locations (Ahemdabad, Mehsana, Pune and Bangalore) Denim capacity of 110 Mn metres per year Own brands - Flying Machine, Newport, Ruf & Tuf, Ruggers, Excalibur etc Licensed brands - Lee, Arrow and Wrangler Major markets for Denim - India, Europe and USA Major clients - Levis, Gap, J.C. Penny, Wrangler etc


Vertical integration in manufacturing garment from yarn. Operationally efficient - even at the lowest point in the denim downturn the company never made a loss at the operating level due to economies of scale.

Raw material costs account for 47% of the total production cost Cotton constitutes 66% of the raw material costs - To take advantage of the current reduction in cotton prices - company has entered into forward contracts on cotton. Research cell of 15 members working with international consultants like Lawrence, to make different styles and textures of denim. Continuous product innovation and strong relationships with leading brands have ensured sale of differentiated denim, which accounts for 60% of the total denim sold. This percentage is expected to improve further in the coming months.


Denim is highly fashion oriented - A change in cycle can have a major impact on the fortunes of the company. Fragmented nature of industry - top 5 players account for just 10% of the global capacity - No single company can influence global trends. Unfavourable rise in raw material prices can have a direct impact on the company's bottom line.

Future Plans:

Moving up the value chain - Get into garment making for shirting and trouser bottoms - without capital investment, but by wet leases that will dedicate the entire operations for Arvind. Focus on developing higher margin garments business Contribution per unit of finished shirts and knit garments is 250% more that that of selling shirting and knit fabrics. Changing product mix in favour of higher end cotton products. Improved focus on export markets - exports currently contribute to 55% of sales.

Recent Developments:

Strategic Initiative Arvind Mills has chalked out a new strategic initiative to increase its presence in the high potential market of North and South America. The company aims to increase business from these markets from the present Rs 500 Mn to Rs 2.5 Bn per annum over the next two years. It will offer the full package from basic fabric to garments.

New Licences After bagging the sole licence for lycra, Arvind Mills is close to clinching another deal with US-based DuPont for acquiring the licence for CoolMax, a quick-drying fabric, which is designed for a quick evaporation of sweat. DuPont and Arvind will now work together to develop new products and give Arvind a preferential access to its new products.