Arvind Mills

1.Industry Structure and environment of textile industry in the mid 80 s 2.Snajai Lalbhai decisions 3.Cost competitiveness n sustainability 4.Key Challenges faced

Akanksha Singh Roll No.025 MIRM

Textile Industry in India in the mid-80

Ahmedabad, no more Manchester of the East. Large mills giving way to inexpensive power looms. Government Intervention; nationalizes most of the sick
mills, thus giving birth to National Textile Corporation (NTC). industry becoming increasingly unprofitable.

Bombay mill strike & Labor Movements; textile Emergence of Reliance; introduction of polyester presented
a strong threat to cotton. Now cotton easily got sidelined as an expensive operation.

Sanjaybhai s Decisions
Export; taking advantage of Governments emphasis on exports. New product Denim; Global denim market had only a handful
of producers. R&D efforts with Flying Machine gave it a good insight.

Setting Objectives. Developing competencies; substantially reduced

production and operating cost.

Air-jet looms; manufacturing denims at half the cost, higher

productivity and fully computerized.

Restructuring; to improve profitability.

Cost Competitiveness
Low Manpower cost; 2.9% of total costs versus 29% for
the US based manufacturers.

Low input costs; 5.4% for dyes and chemicals compared to

9.3% for the US.

Low cotton consumption costs; 40% of total costs as

compared to 50% for its competitors.

Reduced energy costs; from 10% of total costs to 4% by

changing to naptha-based turbines.

Reducing capital expenditure; by taking over sick mills .

Major Concern
Cotton prices; are anticipated to increase to the level in
international market.

Backward integration; not possible because of laws and

regulations.

Economic boom; has lead to increase in labor costs cutting the

contribution margins.

Suggestions