Case Study on Ashoka

Spintex

Submitted by:
 Sumeet Bhatere
 Sameer Garg
 Rumi Hajong
 Seema Behera
 Shabnam Kerketta
 Company Overview
• Asoka mill was setup in 1932 in Gujarat in Ahmedabad
• It was initially setup to manufacture coarse and medium fabric but later expanded it’s business
in the field of spinning and weaving
• Since it’s start the company was doing fairly well but in 1987 the company registered loss for the
first time and after that the financial condition of the company saw deteoriation
• The loss was mainly due to the reason when the company wants to get modernize and
therefore installed heavy machine
• The company made fabrics of 36 inches wheras the international market required fabrics of 64
inches and 63 inches
• In 1990, Mr. Anang Chimnabhai took over as the MD of the company and worked changes in
the company that saw some stabilization
• Mr. B.B Sharma was introduced as the general manager of the company in February 1992, from
where the company saw a huge changes
• In December 1991, it was proposed by ICICI to merge the company with Arvind Mills which
finally happenend on 23 June 1995
• The company is at present concentrating only on spinning wheras it’s weaving part was closed
down
 Reason for the closure of weaving department

 In spite of the upgradation of the weaving unit a big amount of capital was needed in order to upgrade
the spinning unit and it was difficult for the company to raise the capital from the market
 92% of fabric was being manufactured by power looms and remaining 8% was met by composite unit. The
power looms required high supply of yarn which could be provided by spinning units only. Hence, the yarn
market has ah huge potential in the domestic market as well as international market.
 Asoka produces 36 inches finished fabric with the view of domestic market but after opening of the
international market in 1991 it was needed to produce 64 inches finished and 63 inches grey fabric, in order
to compete with the international market. Before also, the company was able to sell its product
internationally to only Russian market.
 Good Quality procurement of raw materials required specialised skilled employees
 Material supply and cost fluctuated which further deteriorated production efficiency
 Spinning markets were mostly in Ahmedabad region, other markets viz. Mumbai and Southern India would
require additional transportation cost
 The spinning industry does not have any pollution cause and therefore no investment was need to control
the pollution
 Spinning had the lowest working capital requirement, lowest cycle time for the product to be
manufactured and the lowest receivable period
 Reason for the merger with Arvind Mills

 In the past Arvind bills had successfully brought companies like Laxmi Cotton mils out from the losses and turned
them into a successful venture
 Arvind Mills had the resources to revamp a sick company
 Arvind mills had a good reputation as well as distribution network in the market which was needed in urgent by
Asoka Mill
 Asoka mill was not able to pay the debt of it’s various creditors in the past and therefore had lost their faith in the
company. They also needed capital to procure raw materials, pay the employees and to upgrade the mills. In order
to gain the capital support from the market it was needed for the company to merge with Arvind Mills
 There was pressure from many Financial Institutions that wanted to bailout from Ashoka Mills. Hence, a merger with
Arvind Mills proved to be fruitful as it added to their credibility in this case.
 Arvind Mills has an emotional attachment with the company as the company was a part of Lalbhai Dalpatbhai
group and it was expected that due to this reason the management of Arvind Mills will also help in the development
of Asoka Mills
 The profit of Arvind Mills was sufficient enough to give away the losses of Asoka Mills and in turn get tax exemptions
 Arvind mills senior management has a vast experience in the textile industry and that could be helpful in spreading
the business
 No interference in the operations of Ashoka Spintex
 Action for future growth

5-10 years
• Collaboration with the foreign brands
• Concentrating on the existing spinning business thereby increasing the
market share
• Installing new manufacturing capacity in other strategically important
location

2-5 years
• Focus on the domestic market by expanding it’s tie up
• Try to focus on upgrading the system by installing new and upgraded mills
• Start looking for opportunity in international market as well

0-1 year
• Training the employees in order to increase their efficiency
• Hiring skilled employees to curtail the training and improving efficiency
• Gain trust in the market by paying dividends and other payments in the
market
• Focus on the market of Gujarat and as it has the huge potential
Thank you!