Working Capital Report Arvind Mills 2009 2010

7/31/2019 Working Capital Report Arvind Mills 2009 2010

1/101


2/101

LOVELY PROFESSIONAL UNIVERSITY 2


3/101

A

PROJECT REPORTON

Submitted as partial fulfillment towards thedegree of

Master of BusinessAdministration

SUBMITTED BY:JATIN KHURANA

PROJECT GUIDE:

Mr. HIREN RAO

SUBMITTED TO:

ARVIND LIMITED



4/101

CERTIFICATE

THE ARVIND LIMITEDNaroda Road, Ahmedabad-380 025 India.

Phone :( 079) 22203030 A MEMBER OF LALBHAI GROUP

TO WHOMSOEVER IT MAY CONCERN

This is to certify that JATIN KHURANA, student ofLOVELYPROFESSIONAL UNIVERSITY, have successfully completed their training at theFinance & Accounting Department ofTHE ARVIND limited, under the guidance ofMR.HIREN RAO.

The project duration was from 21st JUNE to 5th AUGUST 2010.

We wish him all the most the best future career pursuits.

ForTHE ARVIND limited.

Mr. Shobit Tyagi

Head Corporate Human Resources



5/101

PREFACE

For a long time, there is a wind of recession blowing all over thebusiness world and wealth liberalization policy in the Indian Economy.So, now a days market is becoming more and more competitive scenario,company demands more and more professional and accomplishedemployees.

Students have to get practical training along with the theoreticalknowledge of the business condition. There are many advantage ofmaking these kinds of reports, the student can become aware of the

particular knowledge about marketing of capital goods. Reading givesonly the theoretical knowledge that visits gives practical knowledge.

It is true that technical studies can not be perfect without practicaltraining and perfection is basic necessity of management student.



6/101

AcknowledgementWith the successful completion of my Summer Internship Program, Iwould like to express my deep gratitude towards all of those who havehelped me during my learning program.

Firstly I would like to thank Mr. Shobhit Tyagi, Head- Human Resource,Arvind limited for providing me with this opportunity to be a part of thisorganization.

I would also like to thank my LPU guide, Mrs.Sweta Singh for guiding methroughout this project. Her dedicated and constant efforts and sincereadvices helped me a lot in gaining knowledge and putting forward my full

potential. He gave me ample of time to complete this report.

Though language is a poor substitute for sentiments but still I want toexpress my Special thanks to my company guide Mr. Hiren Rao, Head finance Department for his wise advises and critical analysis towards my

project. Without his support this project would never have been a success.With his each and every contribution there has been a value addition in mylearning.

I would also like to show my heartfelt thanks to Ms. Milli Das who helpedme a lot in completing my project. Her timely and sincere suggestionsadded value to my project.

Besides this, my sincere thanks to all the members of Arvind Limited who

have always guided for improvements during these 6 weeks. I would alsothank my family for their constant support in completing this project.

LOVELY PROFESSIONAL UNIVERSITY



7/101

DECLARATION

We do hereby declare that the project report title:

At ARVIND limited, Ahmadabad has been submitted as a part of thecurriculum for the degree of Master of Business Administration, LOVELYPROFESSIONAL UNIVERSITY, JALANDHAR

JATIN KHURANA

MBA-II



8/101

INDEX

NAME OF THE CONTENT PG.NO(A) INTRODUCTION TO TEXTILE INDUSTRY 10

CONTRIBUTION OF TEXTILES TO ECONOMY 11

EVOLUTION OF TEXTILE INDUSTRY 11

SEGMENTS IN TEXTILE INDUSTRY 12

INDIAN TEXTILE INDUSTRY 13

GUJRAT TEXTILE INDUSTRY 13

TEXTILE INDUSRTY KEY FACTS 14

MAJOR PLAYERS IN TEXTILE INDUSTRY 15(B) INTRODUCTION TO ARVIND MILLS 17

COMPANY PROFILE 18

FABRIC PRODUCTION 19

ORGANIZATIONAL STRUCTURE 20

SUBSIDIARIES 20

BOARD OF DIRECTORS 21

GROUP OVERVIEW 22

COMPANY'S VISION 23COMPANY'S MISSION 23

COMPANY'S PHILOSOPHY 24

FUNCTIONING OF THE ORGANIZATION 24

(C ) DENIM MANUFACTURING PRROCESS 27

BRIEF ABOUT OPERATIONS 28

SPINNING 30

DYEING AND SIZING 33

WEAVING 37FINIISHING 39

QUALITY ASSURANCE 41

DEVELOPMENT AND NEW TECH. GROUP 43

INSPECTION 45

ISO AND EMS 47

INTERNATIONAL MARKETING 51

PORTFOLIO OF ARVIND 57

(D) FINANCIAL SCENARIO 60SHAREHOLDING PATTERN OF ARVIND LTD. 61



9/101

FROM OLD TO NEW ARVIND 62

(E) WORKING CAPITAL MANAGEMENT 64

CONCEPT OF WORKING CAPITAL 65

FORMS OF WORKING CAPITAL 66

COMPONENTS OF WORKING CAPITAL 68SOURCES OF WORKING CAPITAL 69

OBJECTIVES OF WORKING CAPITAL 72

DETERMINANTS OF WORKING CAPITAL 72

SIGNIFICANCE OF ADEQUATE WORKING CAPITAL 74

EFFECTS OF EXCESSIVE WORKING CAPITAL 74

BALANCE SHEET OF ARVIND 76

PROFIT AND LOSS A/C OF ARVIND 77

WORKING CAPITAL OF ARVIND(ACTUAL) 78TANDON COMMITTEE NORMS 85

WORKING CAPITAL OF ARVIND(TANDON

COMMITTEE) 86

WORKING CAPITAL GAP 87

SUMMARY OF OPERATING CYCLE 88

ARVIND LTD. LAG PERIOD 89

(F) INTERPRETATION 90

(G) WORKING CAPITAL POLICY 91(H) PROBLEMS WITH EXCESSIVE WORKING CAPITAL 92

(J) S.W.O.T ANALYSIS 94

(K) CONCLUSION 97

(L) BIBLIOGRAPHY 98



10/101

INTRODUCTION



11/101

The Indian textile industry has a significant presence in the economy as well as in the

international textile economy. Its contribution to the Indian economy is manifested in

terms of its contribution to the industrial production, employment generation and

foreign exchange earnings. It contributes 28 % of industrial production, 13 % of excise

collections, 25 % of employment in the industrial sector, nearly 28 % to the countrys

total export earning and 6 % to the GDP.

Industrial Production 28%

Excise Collections 13 %

Employment in the Industrial Sector 25 %

Countrys total Export Earning 28 %

GDP 6 %

CONTRIBUTIONS OF TEXTILE INDUSTRY IN ECONOMY



12/101

In human history, past and present can never ignore the importance of textile in a

civilization decisively affecting its destinies, effectively changing its social scenario.

EVOLUTION AND EVALUATION OF TEXTILE INDUSTRY

The RAG TRADE, as it is referred to in the UK and Australia is the manufacture,

trade and distribution of textiles.

There were various stages from a historical perspective where the textile industry

evolved from being a domestic small-scale industry, to the status of supremacy it

currently holds.

The cottage stage was the first stage in its history where textiles were produced on a

domestic basis. During this period cloth was made from materials including wool, flax

and cotton. The material depended on the area where the cloth was being produced,

and the time they were being made.

In the later half of the medieval period in the northern parts of Europe, cotton came to

be regarded as an imported fiber. During the later phases of the 16th century cotton

was grown in the warmer climates of America and Asia.



13/101

A number of new innovations led to the industrialization of the textile industry. In the

initial phases, textile mills were located in and around the rivers since they were

powered by water wheels. After the steam engine was invented, the dependence on the

rivers ceased to a great extent. In the later phases of the 20th century, shuttles that were

used in the textile industry were developed and became faster and thus more efficient.

Today, modern techniques, electronics and innovation have led to a competitive, low-

priced textile industry offering almost any type of cloth or design a person could

desire. With its low cost labor base, China has come to dominate the global textile

industry.

SEGMENTS IN TEXTILE INDUSTRY

Our textile industry constitutes the following segments Readymade Garments- denims, made-ups, shirts, etc.

Cotton Textiles including Handlooms (Mill made / Power loom/ Handloom)

Man-made Textiles

Silk Textiles

Woolen Textiles

Handicrafts including Carpets

Coir

Jute



14/101

INDIAN TEXTILE INDUSTRY

The Indian textile is one of the largest segments of the Indian economy accounting for

over one-fifth of the total industry production. The industry has a complex structure

marked by presence of large scale production units as well as small-scale units. The

industry is manufacture driven with spinning having large-scale operation retailing as

weakest link.

Indias textile is second largest in the world, next to china, with annual shipments of

USD 20 billions and a work force of 20 million people. It generates 7% of Indias

GDP, 20 % of its industrial output and 38 % of its export earnings. The competitive

position of Indian textile largely reflects its vast domestic fiber base, low cost and

skilled work force, established allied industries, significant yarn and fabrics capacity

and manufacturing flexibility. India also produces a fabulous range of men-made

fibers, polyester cotton and polyester-viscose blended fabrics. India offers an alluring

range of made up item like scarves and stoles in exotic, intricate patterns and magical

finishes.

The Indian industry is pre-dominantly cotton based with 70 percent of the raw

Materials consumed being cotton. It is composed of the three major sectors, namely-

the mill, also called the organized sector; the handloom and power loom sectors both

being classified as decentralized sectors and; the garments sector.

GUJRAT TEXTILE INDUSTRY

Gujarat is one the leading industrial states in India and textile industry in India in

particular had contributed in big way to the industrialization of the state. In fact,

development of the many industries like dyestuff, chemicals Engineering/foundry and

cotton farming is solely dependent on these sectors. The state is well known for

development of hybrid cotton, ginning, power looms, composites mills, spinning units

and independent processing houses.

In Gujarat, textile manufacturers use cotton based fabrics in mill sector, major reason

being the availability of the basic raw materials in the state, i.e. cotton. Similarly many

spinning units producing more conservative yarns were established in the state. The



15/101

state happened to be more conservative with cotton textile products mainly in the

organized sector, weaving and synthetic textile in decentralized sector. Surat art silk

manufacturers are only exception. Similarly, independent processing units process

synthetic blended and cotton fabrics. Clusters of processing units are located in Surat,

Ahmedabad and Jaipur, though these production units have good capacity of

processing wide range of fabric.

Ready-made Garment manufacturing and hosiery knitwear unit also exists in SSI

categories. In early 1990s Gujarat saw dramatic change in its textile industry scenario

where quite a few textile mills started manufacturing Denim. The Arvind mills,

Ashima Textiles, Soma Textiles, Modern Denim, and Arvee denim started

manufacturing denim. So many mills at a time fetched a new name for Ahmedabad

Denim city of India whereas city of Surat became Silk city of India.

TEXTILE INDUSTRY KEY FACTS

The Indian textile industry is second largest industry in terms of providing vast

employment opportunities and employs around 35 million people in country

after agriculture sector and contributes 14% to industrial production of the

country.

Textile Industry contributes around 6% of GDP, 13% of excise collections, 25%

of employment in industrial sector, and has 28% share in countrys export.

Industry has direct and strong linkage with rural and agriculture sector,

therefore it is estimated that, one of every six households in country is directly

or indirectly dependent on this industry

Industry contributes

12% of world production of textile fibers and yarn

25% share in the world trade of cotton yarn

23% of the worlds spindle capacity

6% of global rotor capacity

61% in world loom age

Including textiles and garments, 30% of India's export comes from this sector.

Large and potential domestic & international market, large pool of skilled and

cheap labor, well-established industry, promising export potential etc. are few

strengths of Indian Textile Industry.

http://www.india-crafts.com/business-reports/indian-textile-industry/textile-industry-key-facts.htmhttp://www.india-crafts.com/business-reports/indian-textile-industry/textile-industry-key-facts.htm


16/101

Highly Fragmented, High dependence on cotton sector, Lower productivity,

and Unfavorable Labor Laws are few drawbacks of the industry which it has to

overcome.

After the elimination of quota restrictions and implementation of National

Textile Policy 2000, it is estimated that the industry will grow with rapid rate

and help to strengthen the Indian economy.

MAJOR PLAYERS IN THE TEXTILE INDUSTRY IN INDIA

ARVIND LIMITED

Arvind Mills is one of the major and fully vertically integrated composite mills

players in India. It has large production in denim, shirting and knitted garments.

It is now adding value by manufacturing denim apparel. Its sales are around

US$ 300 million.

RAYMONDS: Raymonds has the large, diversified integrated business

model, which is spread across the value chain from yarn to retail. It is

specialized in Diversified woolen textiles. It already supplies to some US

retailers.

RELIANCE TEXTILES : Reliance Textiles is one of the major textile

Company that is in business of fully integrated man-made fiber. It has capacity

of more than 6 million tones per year. It has joint venture partners like, DuPont,

Stone & Webster, Since (Italy) etc.

VARDHMAN SPINNING: vardhman deals in spinning, weaving and

processing segment of the industry. It is planning to double its fabric processing

capacity to 50 million meters. It is an approved supplier to global retailers like Gap,

Target and Tommy Hilfiger. Its sales are little over US$ 120 millions

WELSPUN INDIA : (Manufactures terry towels)

CENTURY TEXTILES: (Composite mill, cotton & Man-made)

MORARJEE MILLS: (Fully integrated Composite Mill)

INDO RAMA: (Cotton and Man-made)

GTN TEXTILES: (Cotton Yarn and Knit Fabrics)

GINNI FILAMENTS LIMITED:. (Yarn and Fabric)



17/101

LNJ BHILWARA GROUP :(Diversified and vertically integrated denim

producer with spinning and weaving capacity)

MAFATLAL TEXTILES: (Fully integrated Composite Mill)

MODERN GROUP :(Diversified, producer of denim, syntax and thread)

ASHIMA SYNTAX: (Man-made Fiber)

KG DENIM: (Fabrics)

SANGHI POLYESTER LIMITED: . (Manmade Fiber)

NOVA PETROCHEMICALS: (Man-made Fiber)

S.KUMAR SYNFABS LIMITED:. (Home furnishing and Suit Fabrics)

BOMBAY DYEING LIMITED: (Composite and fully integrated)

RAJASTHAN PETRO SYNTHETICS: (Diversified)

BSL LIMITED: (Textiles)

GARWARE POLYESTER:(Diversified)

BANSWARA SYNTEX: (Composite)

NATIONAL RAYON CORP.: (Man-made fiber)

GSL INDIA LIMITED: (Threads)

INDIAN RAYON :(Man-Made Fiber)

ALOK TEXTILES: (Cotton and Man-made Fiber Textiles)

SHARDA TEXTILES MILLS: (Man-made Fiber)

BIRLA GROUP DORMEUIL BIRLA VXL LIMITED: (Fully integrated

woolen textiles)

GOKULDAS IMAGES: (Diversified)

HANIL ERA TEXTILES: (Yarn, Cotton & Man-made Fiber)

OSWAL KNIT INDIA: (Woolen Wear)

NIRVAT SAM APPARELS; (Apparel)



18/101

COMPANY PROFILE



19/101

The aim was to indigenously produce fine and superfine cotton fabric as well as

traditional material for vast potential

Indian market.

At this juncture, Arvind Mills was set

up with the pioneering effort of three

brothers, Kasturbhai, Narrotambhai

and Chimanbhai Lalbhai becoming

Worlds largest exporter and Asias

largest producer of denims. During 1980s several mills in Ahmedabad closed down as

a result of competition from cheaper cloth produced by small power loom enterprises.

Militancy spurred by textile labour unions prevented the shutdown of several loss-

making mills, and in the mid 1980s Ahmedabad was a city of industrial strives.

ARVIND MILLS has risen like a phoenix from the ashes of Ahmedabad textile mills.

In just eight years it has successfully implemented a turnaround strategy. Established

in 1930, Arvind Limited is the flagship company of $ 498 million. Lalbhai Group has

now focused its attention on few selected core product groups. Arvind today is a one-

stop shop for all cotton fabric requirements, where product range spans the entire

gamut of cotton fabric. It is also a rapidly expanding manufacturer of garments such as

jeans and shirts. With the best technology and business acumen Arvind Mills became

the true multinational producing the finest fabric available in the country that rivaled

imported fabric. Since then, there has been no looking back. Having established itself

as Indias largest denim manufacturer, Arvind Mills is confident that in the near future

it will become the fifth largest denim producer in the world.

FABRIC PRODUCTION



20/101

In the 1980s the growing threat from small power

loom operators forced Ahmedabads composite

mills to shift their focus to product areas in which

they could compete. In order to better address

newer and wider business opportunities, the

company shifted perspective from domestic to

international markets. At a time when the local

textile industry was declining, Arvinds

management devised a turnaround strategy called

Reno vision. It represented an open-minded

approach that would seek out new opportunities.

In 1987 Arvind Mills made a conscious strategic

decision to change its production emphasis from

a portfolio of traditional domestic textiles to high

quality cotton fabrics. This required a level of

technological expertise, which small power loom

operators could not compete with. Arvind

identified denim as a key fabric. International

consultants McKinsey & Co. helped to frame

companys business strategy, formulate its organizational restructuring and

establishing international alliances.

Today the company is engaged primarily in the manufacturing of indigo-dyed denim

fabrics, fine and superfine cotton shirting and bottom weights, and conventional

domestic fabrics such as sarees and voiles. In 1995 Arvind Mills held an 80% share of

India's domestic market for denim.

ORGANIZATIONAL STRUCTURE



21/101

Arvind defines its operations in terms of Strategic Business Units (SBUs). Each

product line such as denim, shirting, knits, voiles, etc is designated as an SBU.

Each unit is headed by a president who is able to make independent decisions on

finance and marketing. The president is assisted by vice-presidents who look after

functional divisions.

The concept of SBUs, which was implemented in spring 1995, was adopted on the

advice of McKinsey; mainly to facilitate the companys expansion plans but also to

provide an accurate picture of the performance of individual product lines.

Each SBU, which is similar to a product division

within a corporation, operates as a profit center.

While long-term planning is carried out by the

corporate group in consultation with the management

of each SBU, medium and short-term planning is in

the hands of the unit.

Arvind has been successful in attracting high caliber

professionals from the best multinationals and blue chip companies.

SUBSIDIARIES

Arvind Mills has 11 subsidiaries, of which seven are in textile and related

businesses. They are:

Arvind Clothing limited.

Arvind Fashion limited.

Arvind Worldwide Inc, USA

Arvind Clothing limited (ACL), situated in Bangalore, began commercial productionin April 1994. ACL is the exclusive licensee in India of CluettPeabody & Co of the

USA, which owns the Arrow brand name. It has the capacity for making 1 million

shirts per annum, and has received ISO 9002 certification.

Arvind Fashion limited (AFL) is a licensed user of the brand names belonging to the

US Company VF Corporation, which owns the well-known international trade mark

Lee. The company has a letter of intent from the Indian government (pending the

issue of a license) permitting it to manufacture up to 960,000 garments per annum,provided it exports 50% of the garments produced.



22/101

AFL has invested Rs.160 million in establishing a jeans manufacturing unit at

Bangalore. The state-of-the-art factory, which has a production capacity, of 500,000

pairs of jeans per annum, is equipped with machines made in the USA, Japan and

Europe.

Spring 1995 saw a launch of a wide range of products-including jeans, jackets, denim

shirts, twill shirts, T-shirts and accessories such as belts and bags under the Lee

trade mark. These are sold through exclusive showrooms located in major cities

throughout India.

Although its current turnover is small, AFL is in good position to capture a significant

share of the growing domestic market.

BOARD OF DIRECTORS

The top management of the company consists of following members:

GROUP OVERVIEW

The Lalbhai group, founded by the 3 Lalbhai brothers in 1908, has grown to

become one of India's most diversified business houses, with a significant presence in


Name Designation

Mr. Sanjay S. Lalbhai

S/O Mr. Shrenik bhai Lalbhai

Executive Chairman & Managing Director (Promoter)

Mr. Jayesh k. Shah

S/O Mr. Kantilal Shah

Executive Director & Chief Financial Officer

Mr. G.M. YadwadkarS/O Mr. M.A Yadwadkar

Non-Executive, Independent Nominee Director IDBIBank limited.

Mr. S.R. Rao

S/O Raghunatha Rao

Non-Executive, Independent Nominee Director

EXIM Bank of India

Mr. K.M. Jayarao Non-Executive, Independent Nominee Director

ICICI Bank limited.

Mr. Sudhir Mehta

S/O Uttamlal Nathalal Mehta

Non-Executive, Independent Director

Mr. Tarun Sheth

S/O Natwarlal Gordhandas Sheth


Mr. Munesh Khanna

S/O Narindra Khanna


22


23/101

the textiles, ready-to-wear, chemicals, air-conditioners and telecom industries in

India.

Each company in the group, in its own way, pursues a single mission - to be the

benchmark in the industry. To achieve this, they have tied-up with a variety of

companies, all world leaders in their respective fields.

LALBHAI GROUP COMPANIES

TEXTILES/ YARNS

o Arvind limited.

o Arvind Products limited.

o Arvind Fashion limited.

o Arvind Brands limited.

o Arvind Intex

o Arvind Cot spin

o Garment Export Division, Bangalore

o Arvind Overseas limited., Mauritius

CHEMICALS

o Anil Starch Products limited.

o Atul limited.

TELECOM

o Arvind Telecom

OTHERS

o Anup Engineering limited.

o Anagram Stock Broking

o Lalbhai realty limited.

o Amtrex Appliancesm limited.

COMPANYS VISION



24/101

"To achieve global dominance over various businesses built around our core

competencies, through continuous product and technical innovation, customer

orientation and a focus on cost effectiveness".

All along Lalbhai Group has maintained a responsive yet levelheaded attitude towards

the society and its training individuals to create a corporate culture that fosters

excellence. Working in this direction the company has created a learning environment

that nurtures individual talent and intellect. It provides a platform that challenges the

individual capabilities urging them to constantly strive forward towards greater heights

using development as the fundamental tool.

It infuses in individuals a spirit of entrepreneurship which gives courage and

conviction to pursue set goals towards logical achievement and a global mindset that

transcends geographical and cultural boundaries evolving as a world leader. All this is

manifest in an environment fostering innovation and leadership.

Drawing from the Team based structure to encourage individuals to mesh up into

cross-cultural teams in all operational processes. This process provides opportunities

for individuals to match their capabilities with organizational expectations creating a

mechanism for updating the system. A strong sense of ownership and commitment

towards the organization and the business as a whole is the basic premise of all the

company actions.

COMPANYS MISSION

Arvind limited. has laid down certain aims and objectives to be achieved while

pursuing its corporate activities. These are:

To provide a favorable work environment to the employees to direct their working

towards achievement of corporate goals.

To provide opportunities creating a mechanism for updating the system

To manage the institution as a trust, as empowered leaders and do all that needs to be

done ethically for the purpose of the institution.

To create a vibrant institution for the future of this nation and the world at large

To be a world leader in an environment fostering innovation and leadership.

To reinforce connections, and catalyze the chemistry that allows connections to betranslated into action which is beneficial for both the organization and the individual.



25/101

COMPANYS PHILOSOPHY

"It is my responsibility as a leader to create an environment where excellent

people would like to come and give their best, to create a vision, to give freedom

for excellence."

- Sanjay Lalbhai (Managing Dir.)

We believe in potential of every human being. Our Human Resource Development

policy reflects this belief.

We recruit the best talent wherever we do business, offer competitive compensation,

provide a dynamic work environment, make people accountable for results, and charttheir growth through systematic career planning. Our structures are well defined which

allows us to be more flexible and respond to the customers promptly.

We encourage innovation and entrepreneurship and motivate our people to take on

leadership roles through job re-assignments. This helps us create a learning

organization with a workforce that has multi-dimensional experiences and skills.

Our campus recruitment program and on-going involvement with educational

institution ensures access to highly trained managers, engineers and workers to support

our aggressive global plans. And our training centers FOUNTAINHEAD (the hub of

all training activities at Arvind), INDRADHANUSH (for operatives), ORCHID (for

behavioral training), and CALCULUS (for computer training) ensures they continue

to learn and grow.

FUNCTIONING OF THE ORGANIZATION

Each Strategic Business Unit is headed by a Business Head. There are also small

garment units at Asoka and Retail outlets at Naroda. The organization has adopted a

Hybrid Structure to be more responsive to the changing markets in which the

Functional and the Divisional structures are combined together. As the organization

grew larger with several products and markets, it typically organized into self-

contained divisions. Functions like marketing, which is important to each product or

market are decentralized to the self-contained units. However, some functions like

Finance, MIS, Legal and Secretarial, Taxation and Services that are stable and require



26/101

economies of scale and in-depth specialization are centralized at Naroda Corporate

headquarters. Each of these departments provides services for the entire organization.

The main product divisions are Denim, Shirting, Knits and Central Utility that are

created to serve a different market. Individually, they all require a different strategy

and management style. Each product Line Head is in charge of all functions of that

product such as marketing, planning, supply and distribution, and manufacturing.

There is no Matrix reporting, which means that they follow one-to-one reporting. The

Supervisors will report to the Functional Heads or Managers and the managers in turn

will report to the Managing Director who is the apex of the organization.

EMPLOYEES

The company in all is operating on strength of nearly 3000 managerial cadder

employees and approximately 15000 first line managers. Employees are all qualified

and technically efficient to serve its clients. Employees are given training of all the

products and services so that they can serve its clients better. Company has a healthy

incentive structure for its employees.

TURNOVER

The approximate turnover of the company was Rs. 2344.99 crores (as per current

financial year 2008-2009).

GEOGRAPHICAL SPREAD

Arvinds worldwide network facilitates Global account management for the leading

brands and local customers. With offices in New York, London, Bangladesh, Delhi,

Ahmedabad, Mumbai, and Bangalore, Arvind has made itself ready to attend to its

customers anywhere on the Globe. Besides their global offices, they have independent

and devoted sales force for all locations and dedicated resources for key accounts.

COUNTRYWISE EXPORT FOR DENIM (CONTRIBUTION IN

%)



27/101



28/101

DENIM

MANUFACTURING

PROCESS

BRIEF ABOUT OPERATIONS



29/101

Arvind Limited has carved out an aggressive strategy to verticalize its currentoperations by setting up world-scale garmenting facilities and offerings a one-stopshop service, by offering garment packages to its international and domesticcustomers such as Lee, Wrangler, Arrow and Tommy Hilfiger and its owndomestic brands such as Flying Machine, Newport, Excalibur and Ready to Stitch(RTS) previously was Ruff & Tuff. It has now become the largest producers andExporters of Denim Fabric in the World.

Talking about the Operations Our Arvind Limited follows is that they purelyfocus on Customer Centric Approach i.e. Customer gives a Samples of Fabric toMarketing Department according to their Requirements and then after working ofdepartments such as DNTG, Spinning, Dyeing and Sizing, Weaving, QualityAssurance, Inspection, ISO starts.

The Management Staff and Workers are well trained to handle each processand the Machines for operations are workers friendly i.e. Workers know their part,

which machines indicate.

The worthwhile thing here is Companys total dedication on QualityManagement by having departments such as Quality Assurance and Developmentand New Technology Group. Not only this but also they take samples after each

processes which will be explained in detail hereafter.

As we come to know that Arvind Limited produces different Fabric such asDenim, Cotton Shirting, Trousers, Bottom weights and Knits. We have visited theProcedures for manufacturing Denim Fabric and this starts from Spinning,

Weaving, Dyeing, Finishing, Quality Assurance, DNTG, Inspection, ISO + EMS,Marketing and HR.

To start with, generally our idea was just that ARVIND LTD. produces DenimFabric and we are unaware about the Processes they use from Procurement ofCotton fibers until the End Product that is Finish Fabric (a saleable Product).

PROCESSES



30/101

Before producing a Final Fabric of Denim i.e. wearable Fabric, it passes throughdifferent routes and as discuss earlier that we have visited different processdepartments on the basis of time-table given below.

INDUSTRIAL PROJECT INDUCTION TIME TABLE

DATE TIME DEPARTMENT NAME

3-07-2010 10:00 hrs to 15:00 hrs. Spinning Devesh Shah

05-07-2010 10:00 hrs to 15:00 hrs Weaving Dipak Pandya

06-07-2010 10:00 hrs to 15:00 hrs Dyeing Hitesh Shah

07-07-2010 10:00 hrs to 15:00 hrs Finishing KB Shah

08-07-2010 10:00 hrs to 15:00 hrs QA Pranab Karmakar

09-07-2010 10:00 hrs to 15:00 hrs DNTG Rahul Roy

10-07-2010 10:00 hrs to 15:00 hrs Inspection RT Shah

12-07-2010 10:00 hrs to 15:00 hrs ISO+EMS Ajay Dwivedi

13-07-2010 10:00 hrs to 15:00 hrs Marketing Smita Deshpande

SPINNINGLOVELY PROFESSIONAL UNIVERSITY 30


31/101

First, it is worth to note that Production is evergreen line, without production no singlemanufacturing company survives in this competition market.



32/101

Procurement of cotton is done based on the Cotton Testing Laboratories by checkingCottons Length, Strength and Uniformity. Then they Co-ordinates with SpinningDepartment to start with producing yarns, but this were just for procurement of cottonfor Spinning Department.

COTTON SPINNING HAS 4 TYPES OF PROCESS:-

Ring Spinning

Rotor Spinning or OE Spinning

Adjudge Spinning

Trap-Frictions Spinning

To manufacture a Denim Fabric Arvind Ltd. uses Rotor Spinning or Open-EndSpinning Processes and Ring Spinning is used at our another Business Divisions that isAshoka Spintex.Spinning Department produces 60 tones of Yarn with potential of 24 Rotor SpinningMachines by having different counts and that is Thicker (Coarser) which is used for

Denim and within counts of 5.3 to 20 and the thinner yarn is used to manufactureShirting and Trousers within counts of 30 to 160.

They are having Open End Spinning Process for making Yarns and in this Cottonare passed through four different routes to produce a Yarn:-

Blowing: - In this blower machine Cotton passes through various kinds of blowingmachines to remove impurities such as Fibers, seeds etc.

Carding: - In this again cotton passes through a machine to open its individual

fibers and again impurities is removed if found. After this process, cotton takes aform of Slivers in which cotton base is mentioned and directly goes into cards.There three Liners and each liner are having 12 Cards so there are 36 Cards intotal.

Draw- Frame (Drawing):- After Cards have been prepared, it is considered as aFrames and it goes for Breakers and Finishers. Breakers draw this Card into double

productions and Finisher is Single Automated machine to do the same work asBreaker. There are total eight Breakers and eight Finishers.

Then after the above three process, it goes into the Final yarn making machinewhich is known as AutoCoro. It continuously keep a watch on production of yarnand any deviations found it gives Red indication on Machine so that operators tryto resolve that.

Now if we compare between Rotor Spinning and Ring Spinning Process then RotorSpinning (Open-Ended) is economically viable for the Production of Denim yarn

because it deals with the less number of processes then Ring Spinning.



33/101

DYEINGAND SIZING


Rotor Spinning Ring Spinning

Blowing

Carding

Draw-Frame

Yarn

Final Packaging

Blowing

Carding

Drawing-Frame

Roving Frame

Ring Frame- Yarn

Winding

Final Packaging

33


34/101

After Spinning department producing yarns and then after converts it into warp beamsit is then transferred to the Dyeing and Sizing Department for the further processes.Mainly they used natural indigo dyeing in producing Denim Fabric and as per therequirements of customers, they also used multi-colored dyes such as Black, Blue,

Navy Blue, Green with the help of Sulphuric Colors.



35/101

Dyeing and Sizing department uses two Approaches for dyeing the warp beams andSizing of it.

I. Sucker Muller ( Warp Dyeing)II. Rope Dyeing

SUCKER MULLER:- Generally there are 320 to 400 number of ends in a warpbeams, in addition, this machine can handle upto 12 Beams in one go. In thismachine, it follows some process such as-

a) The machine starts with the warp feeding motor which pick yarns and rotates itin a clockwise direction in which left roller rotates the yarns into upwardsdirection and right roller rotates a yarn into downside direction.

b) Then comes the stage of Preventive motor which works for pouring of yarn andit clean yarns by removing impurities if any.

c)In the third stage, washing of yarns is done at 50 .C and shades can be decided.This is also called Pre-dye wash.

d) Then after there is a Dyeing zone and there are six such zones are there. First ofall Indigo dye is applied i.e. coated on yarns and such process is continued forthis six zones with Coating and Oxidization of yarns to remove unnecessaryindigo from yarns so that it maintains its width of weaving ability.

e) Now this machine takes dyes from all tanks and absorb to the surface of yarns

and the remaining dye taken care by absorber tank to reuse such dyes andreduce wastages. After six zones of dyes, it washes 10 times to remove theindigo from the surface. This is also called post-dye wash to decide the shadesfor the fabric.

f) Then a stage of dryness comes into account to maintain yarns strength.Maximum 7% moisture is used to make a dye yarn dry. Thereafter 10separations are there to make yarn to go for beams with the help of combingmetals i.e. separation of number of ends takes place and directly sizing part isdone. However, the point here is to note that after fulfilling each beam

requirement the cutting part is done without stopping he machine and outputwith the help of compensators. The compensator compensates the yarn until thenext beam is ready to take it for sizing.

Each Sucker Muller machine involves four workers to handle it. The dyeing can alsobe done as Sulphur Bottoming and Indigo topping (SBIT), Indigo Bottoming andSulphur Topping (IBST), Yellow Bottoming Indigo Topping (YBIT), IndigoBottoming Green Topping (IBGT). This method of Dyeing is also known as Warp

Dyeing.



36/101

ROPE DYEING :- In this method a warp beams first converts into rope beamersandthen transfer to the 50 Rope Dyeing machine for the further process.

Rope Dyeing has verifies certain process for dyeing yarns.

a)Creel Section:- In this section 50 balls are setup at creels with generally 400 to 430ends. Creels setup is as follows

b)The first section is known as setup section but after that it comes the machinelayout portion i.e. there are 19 Boxes through which Rope passes for various partsas follows:-

Box No:- Process Name Activity Temperature

1.)

Scoring Process( Washing)

If found Impurities of Yarns removed.70.C

2,3,4.) Pre-Dye washingProcess

Before Dyeing washing of Ropes. 50.C

5,6.) Shading Process Shading taken care as per requirement. N.A

7 to 14.)Dyeing Process

Indigo Tank do dyeing process forabout 8 times i.e. Ropes enters and exit

8 times from this tank.N.A

15 to 18.)Post-Dyeing Process

After Dyeing process this boxes givesa wash to Ropes to remove

unnecessary dyes from surface ofRopes with the help of detergent.

EffluentTreatment

Plants*

19.) Softener Process At this stage dryness of Ropes takencare with the help of softeners.Opening of Ropes is done after

Process.

N.A

* Effluent Treatment Plants is helpful in making a solid form of Indigo waste and

make (pH) level

neutralize

a) Dry cans and Coilers: - In this drying process is carried out through Cylinders and

Coilers are used to make Quality arrangements and to make 400 to 430 ends separatefrom individual Ropes.



37/101

The Impact of this Process is that Dyeing Process is done with the possible nearestaccuracy and efficiency but it involves more cost than Sucker Muller in respect ofMachinery, Workers Skills and Working Environment. It gives 5 times moreProduction than Sucker Muller. Here Quality is more focused in terms of Purityissues of Indigo. It gives better penetration of Indigo on Ropes (Yarns) as Dyeing isdone 8 times. It has a capacity of setting 40,000 meters at a time.

Indigo extracts from plants that are naturals and there are synthetic dyes. We mustknow that Indigo is Insoluble element and to make it applied on the Ropes (Yarns)Caustic is added to the Indigo to make it soluble. Still this is not enough this just aformation of Soluble but to apply on surface of Ropes it requires a pathway, which isgiven by Hydro, and it makes the (pH) in its acidic media so that Indigo is directlyapplied to the Ropes (Yarns).

The basic difference between Warp Dyeing and Rope Dyeing is that in Warp Dyeing-

Dyeing and Sizing Process goes together whereas in Rope Dyeing the focus is mostlyon Dyeing Process and then after the Ropes is filled into cans and then Ropes areopened as a Warp and thereafter Sizing part is done.

This department consists of 36 staff in three shifts and apportion of such workers are asfollows:-

Balls Loading = 2 WorkersPatrolling and Platform Visit (Continuous) = 2 WorkersCoilers Handling = 2 WorkersOperators Office = 3 Staff (1 Operator, 2 Asst.Operator)

Filling Indigo Tank = 3 WorkersThe above details are for one shift and there are three such shifts are there.

Therefore this activity is also known as Labor- Oriented activity because the likings ofDamages are more in this Dyeing Process as if any individual Rope breaks then itcreates a problem of lapping on Rollers and due to such Machine has to be stopped

because of such Breakages, and stopping of Machine creates Machine Idle Problems.Therefore, for this two workers keep a continuous watch on Rope Dyeing onPlatforms.

WEAVING



38/101

After passing through different processes such as Spinning, Warping, Dyeing andSizing this is a stage where Raw Fabric is processed and then finally it goes toFinishing Department. Now this stage is processed through Zax a loom set which is

basically a model of Machines. These Machines works with a speed of 700 to 750Rotations per Minute (RPM). There are 203 Machines out of which 159 are ZaxMachines and 44 (209i) Machines. There are 135 meters per Roll as per customersrequirements and after making a Raw Fabric, it generally goes for detecting thedefects. Generally, yarn is produce from cotton, filaments, lykra, Polylykra.

Warp Beamers first installed to the Air jet loom set, which is Technology from Japan(Tsudakoma) and then after a weft is entered into nozzles through air pressure.



39/101

Warp is seen vertically on these machines and weft is horizontal to it. Weft entersthrough censors and passes the full lobby of warp and the dents of warp are set beforestarting the machine. Dents are defined as gap between two ends. The larger the dentsthe lesser will be the gap between two ends.Generally, one machine produces 500 meters of Raw Fabric daily depends on picks. Inaddition, to produce in such a hassle environment you need to have 75 to 80 % ofhumidity required in every textile mills and due to this 10% contraction of fabric takes

place in weaving department. There is inflow of cool atmospheric air from above floorand outflow of air ventilation is given at underground level. There is air blowerattached on the above of such machines to remove unwanted fibers on machines,which is continuously rotating for cleaning purpose.

After one beam is over there is a need for knotting to have a continuous production forRaw Fabric and for that, this department is having a Knotting machine to join the next

beam. There are indicators on each machine for the Terminologies such asT- Total Breakages

W- Warp DamagesF- Weft BreakagesL- Leno and other Breakages.

This indicators help operators in make out damages that occurs due to Dyeing andSizing and sometimes due to weft also. Weft is procured from outside suppliers, so ifthere are more damages or breakages of weft then suppliers are to be aware and theywill have to give more focus on these breakages.

Due to hassle, working environment workers are given Earplugs and Masks due tohumidity level. There are 100 workers in a shift and total there are 3 shifts and

approximately 300 workers work in this department. Recycles wastewater and convertsdenim waste to denim paper, in keeping with their eco friendly production process.

FINISHING



40/101

This department tries to maintain Quality, Production level, and Transparency likeother departments and keep liaison with other departments. This department has three

processes and any process can be by-pass as per customers requirement. They are asfollows:

SINGEING

DESIZINGc) MERCERIZING



41/101

a)SINGEING: - In this process cotton fabric, hairiness, improper slubs are removed

with the help of three burners at 900.C. The burning takes place in one goes i.e.Fabric passes through these 3 burners at a one go.In this process route of fabric is decided automatically and each customers fabric hasits own identity or code number.

b) DESIZING: - This is generally a process called over-dyeing process. Sizing hasalready done in the sizing department after dyeing process but in this process over-dyeing is done to get a good idea of finished fabric. A machine called harrish helpsin process of making wrinkle-free denim fabrics with the help of certain chemicals.It has ability of making permanent stability characteristics on fabrics. Desizing partis done with the help of Dhall Machine.

c) MERCIRIZING : - In this process lustrous, shrinkage and dimension stability of

fabric is taken care with the help of same Dhall Machine. Caustic and Alkali isused in wash tank to know the maximum shrinkages in fabric takes place. After afabric passes through this process, it directly goes to a Acid-Wash Tank in whichthe unnecessary alkali is removed from a fabric.

The above machines costing around 4 to 5 crores and has ability of making processon 40,000 meters per day. While there are other high speed machine which givesheavy production (Approx. 75,000 meters per day). This High Speed Machine isknown as Benninger Impacta-Extracta. In this, all the above 3 process is done on asingle machine. As compared to previous process, this is having high potential tomaintain Quality as it can handle a large production. There are other two machines

are there namely Ordinary Drying Range (ODR) and Ordinary Drying Range + Wetfinishing which focus on all process as per customers requirement.There are 18-19 Machines in this department and to handle this there are 90 workersworking in three shifts i.e. 30 workers are required per shift.

QUALITYASSURANCE



42/101

Every time we talk about Quality and its Management, but this is not talk in the air, wehave certain Quality Parameters of Testing it and maintain it. This department processcomes into center part of process but their working starts at the initial stages from

procurement until final fabric. Firstly, a customer gives a sample as per theirrequirements and then it directly goes to DNTG department to check its ability to

produce such kind of fabric. After this process, DNTG group advises to procure cottonfor making yarns for such production. However, Quality Assurance department toknow the strength of the cotton checks cottons length, uniformity and frequency.This Department also checks coarseness of fibers. They take care about trash, and

evaporations in process of cotton. Without Verification (Standardization) of thisdepartment, no single gram of Raw materials enters into machine.



43/101

The working cycle for Quality Assurance Department is as follows: -


ChemicalSmall Garmenting

CertificationClearance and

CottonLaboratory

Sample

Process


44/101

Development and

New TechnologyGroup



45/101

The objective of this department is to develop samples as per customers requirement.They develop new yarns and fibers and some of their developed categories are LeninDenim, Polyester Cotton Denim and Shades of fabric dyes. As mentioned above, theyreceive samples from marketing for development. Fabric construction and analysis partare also work out here. One authorized member from DNTG keeps liaison with dyeingdepartment, and make plans for dyeing and sizing, weaving, finishing. They also offerfabrics to inspection department for inspecting damages and rate category of fabrics.They do their research in their chemical laboratory for developing the shades fordyeing.

The flow chart for their process after developing a new product is as follows: -

Trial in the Machine (Developed Product)

Checking Width of the Fabric

Checking the Shades of the Fabric

Commercialization of such Product



46/101

INSPECTION

Irrespective of damages are there or not, the work of inspection department is toinspect 100% production. There are four point grading system which is worldwideaccepted.

Inches Point Defects0.3 13.6 26.9 3> 9-1mtr 4

They also categorized fabric into a Quality Table starting from nine to one, in which 9shows the best Quality and 1 shows appropriate Quality for certain customers.

Damages can occur from Core Production departments such as Spinning, DyeingSizing, Weaving, and Finishing.

Due to Spinning the defects such as slub yarn variations, coarseness of weft, etc. mayoccur. Due to Dyeing Sizing defects such as slackage in ends, tightened problems,Shade variations due to machines, size-patch damages, etc. may occur. Due to weavingdefects such as stop-marks, Pick findings, snarls and floats, etc. may occur. Due to

finishing defects such as skewness, shrinkages, width and weight of fabric, etc. mayoccur.



47/101

Inspection department uses Kitamura Machine to find such defects in fabrics. Thereare two inspectors to keep continuous watch on fabric for finding the defects. The 4-

point grading system indicates that as per customer requirement defects are allowableupto their levels. We have observed that in VF brand the 4-point allowable are only4that is total 16 defects per 135-meter roll.

ISO and EMS

Arvind Limited integrates both QMS and EMS, which comes under the head of ISO.



48/101

Since establishment of ISO Arvind Limited were by certified the ISO.Different Quality parameters have to be focus upon and each machine is checked andapproved by centralized laboratory. List of all the process, activities, procedures,record of workers, machines, and work allotted to whom, list of instructions for all theworkers and everything is recorded by the HR department and if any change is to bemade, first it should be informed and permitted by Marketing representative.

INTERNATIONAL ORGANIZATION FOR STANDARDIZATION

ISO 9000 is a family of standards for quality management systems. ISO 9000 ismaintained by ISO, the International Organization for Standardization and isadministered by accreditation and certification bodies. The rules are updated, as therequirements motivate changes over time. There are 176 member countries.ISO 9001 : 2008 is the fourth revision of ISO 9000. All requirements of ISO9001:2008 are generic and are intended to be applicable to all organizations, regardlessof type, size and product provided.

Before certification the agents of ISO takes Assessment audit and Certification audit: -

i. ASSESMENT AUDIT: Here the assessment is done on thesystems and process of the company before certifying.

ii. CERTIFICATION AUDIT: An ISO committee selects theiragents and based on the finding they recommend the company for certification.

Some of the requirements in ISO 9001:2008 (which is one of the standards in the ISO9000 family) include:- A set of procedures that cover all key processes in the business;- Monitoring processes to ensure they are effective;- Keeping adequate records;- Checking output for defects, with appropriate and corrective action where

necessary;- Regularly reviewing individual processes and the quality system itself foreffectiveness; and

- Facilitating continual improvement

ISO is all about: ' Say what you do, and do what you say.

QUALITY MANAGEMENT SYSTEM

The Company documents, implements, and maintains a quality management systemand continually improves its effectiveness in accordance with the requirements of theISO 9001:2008 International Standard. It is managing quality in a systematic way.

The industry has to follow PDCA cycle to get continual improvement:



49/101

It is a cycle, which focuses on how one should approach in his all the activities.First of all planning is required, than according to the plan one should work upon andafter that it should be checked that whether the work is proper or not and lastly if thework is proper and correct it should be done again and if not than should plan foranother work or project.

ACTIONS:-The actions are of two types according to ISO 9000:CORRECTIVE ACTIONSPREVENTIVE ACTIONS

i. CORRECTIVE: Any action taken after the occurrence of the problem is correctiveaction. It prevents the reoccurrence of problem.

ii. PREVENTIVE: Any action to prevent the occurrence of theproblem is preventive action. Company with most Preventive actions is the BestCompany. The employees working in that company will be proactive. However, it

is very difficult to implement in real life situations.

AUDITING:Two types of auditing are required to become registered to the standard:

a. Auditing by an external certification body (external audit) andb. Audits by internal staff trained for this process (internal audits).

Audit should be always Cross Functional and it is meant to improve systems.Non-conformities are not confirming to the requirements and are tool forimprovements.

ISO 9000 is a system certificate not a product certificate. It is beneficial for bothcustomer and the company itself.



50/101

It is not mandatory but depends on the company itself whether it wants or not.The process is Audited every six months.

ADVANTAGE TO CUSTOMER:- It gives confidence to the customer that he will get consistency and

Improvement in the quality and the service provided by the company.

- He will not feel hesitate to use that product which is ISO certified.

ADVANTAGE TO SUPPLIER:- Repeated customers- Improvement in process- Addition to the customer base- Wastage in the process will be less- Inventory carrying cost will be reduced.- Gets more liquidity as money doesnt get block

- Can cater more products to the customer

The validity of the certificate certified by ISO is for 3 years and on the completion ofthis validity, recertification is done and in Recertification, Assessment audit is notdone.Every six months the agents come for Surveillance, they pick up any department andany worker randomly and than check, whether the procedure is as said earlier or not. Inthe cycle of three years, it should be noticed that each department is audit at least once.

ENVIRONMENTAL MANAGEMENT SYSTEM

ISO 14001 was first published in 1996 and specifies the actual requirements for anenvironmental management system. It applies to those environmental aspects whichthe organization has control and over which it can be expected to have an influence.Environment under this system means the surrounding around the organization notwithin the organization.

There are four types of pollution:1) Air pollution2) Water pollution3) Noise pollution4) Land pollution

Air pollution is done by the Gases, which comes out of the chimneys, and thechemicals, etc. Gases like CFC gases, carbon dioxide, etc are such gases, whicheffect and destroy the air adversely.

Land pollution is done by the dye chemicals, which mix with the water andmake it harmful to use and because of this, the land is polluted.

Noise pollution is due to the excess noise of the machines, which is harmful forhuman beings.

Water pollution is due to the wastage of chemicals, dyes, indigo, which comesout of the machines while coloring, dying washing, etc...

Significant actions should be taken to control these pollutions and its harmful effects



51/101

and for this EMS, 14001:2004 is made.

Arvind Limited uses EMP i.e. Environmental Management Process, which makes thewaste and polluted water useable by removing the sludge from it to neutral the Water.The particle, which comes out of the polluted water, is to be thrown away in a place asordered by the government. Those particles are very dangerous and harmful and itshould be transported very carefully and even care should be taken that the particles donot fell down while transporting. This process makes the water neutral and useableafter processing through Effluent Treatment Plants.

For Air Emission i.e. Stack Emission should be minimized. The pollutionshould be within the permissible limits granted by the government.

For Energy, there are programs to see that the energy consumption goes down.There are objectives which they make to minimize the energy usage ant also targetare set up that under a certain limit the energy has to be consumed not more than

that.

For natural resources, the company is seeing that the water consumption should beadequate and wastage should be minimum. Cotton, which is also natural resources,its consumption should be maximum and wastage should be minimum. in addition,should be reduced in every stage

INTERNATIONALMARKETING


Country-Wise Exports for Denim (Contribution in %)

55%55%

15%15%

30%30%U.S.AU.S.A

EuropeEurope

Middle-East(Bangladesh, Turkey,

Sri Lanka)

Middle-East(Bangladesh, Turkey,

Sri Lanka)


52/101

Arvind Limited is India's largest integrated textile company and operates across theentire value chain from designing of fabric to brands. Arvind Limited was the firstcompany in India to bring international brands when they brought Arrow to India.

Arvind has licensing relationships with many international brands like Arrow, GANTUS Polo & Cherokee. They also have JVs with VF Corporation with brand portfolioof Lee, Wrangler, Nautica, Jansport, Kipling, Hero by Wrangler & Lee Riders, TommyHilfiger and most recently a JV with Diesel.

The Marketing Strategies are different as per Geographical Indicators.For Example: - Particularly for Europe countries, Fabric have category named as

Euro-line. The Europeans wants depth of color (Darkness in Fabric).

The Company believes in Secured Payment, therefore, it gives no credit to any of itscustomer but can give terms and conditions of L/C. The Pricing Quotations are

different as per customers convenience i.e. F.O.B or C.I.F. They follow the ethics onFabric such as Width, Weight and Ounces. These are carefully observing and try thatnone of these have been tampered.

Lee & Arrow for the super premium segment

Flying Machine & Excalibur for the premium segment



53/101

Newport for the economy and

Innovative Ruf & Tuf for the mass market

The company has recently made a foray into children segment by introducing Lee

Youth, Ruggers Kids & Newport Kids. Similarly in tie-up with Cluett Peabody, USA,

to manufacture and market their world famous Arrow shirts, it launched what is

todays Indias most inspirational brand of dress shirts.

In a world without boundaries, Arvind FABRICS are equally universal in their appeal.

Arvind aims to enrich lifestyles globally, inspiring diverse customers with the beauty

of their fabric.

Arvind was already making shirting for the Indian market. In 1990, it decided to focus

on high value shirting, so as to expand their markets beyond India's borders. As a part

of their commitment to being a value-adding partner to each of the customers, Arvind

Shirtings have invested US $ 100 million in Santej. This plant has an annual capacity

of 34 million meters of 100% cotton woven. Arvind's philosophy in manufacturing is

'Excellence in Quality and Flexibility in Production'. In the entire process of

operations, eco-friendliness is critically monitored and ensured. The plant is also

configured to handle small order sizes as well as very long order lengths with

consistent quality.

Arvind has recently set up a dedicated bottom weights plant as part of Arvind Polycot

Limited. This new addition to the Arvind Textile Complex brings the total investment

in the complex up to Rs.12000 million. The plant is an integrated facility that sourcesyarn from Arvind at Ahmedabad. It has both weaving and processing infrastructure,

captive power supply, steam generation and a wastewater treatment plant. The latter

makes it a zero discharge complex i.e. one that recycles all its wastewater.

In 1986, we looked for textiles that had global demand, high margins, and high entry

level barriers (either of technology, expertise or set-up costs), and very importantly,

low "fashion volatility". We wanted to focus on fabric that would never go out of style.

Our analysis of potential products threw up denim as the answer. With a production



54/101

capacity of 120 million meter per annum, Arvind is currently Indias largest and

worlds third largest denim manufacturer.

It sells under the brand names ARVIND DENIM and BIG MILL DENIM (in

Europe). In India Arvind commands a market share of approximately 64% which is

five times that of the next largest player. Our denim is used to make Indias leading

jeans brands Flying Machine, Killer, Levis, Numero Uno, Pepe, Texas jeans, UFO

and Wrangler. All the leading local denim manufacturers use Made from original

Arvind denim as an indicator of high quality and consistency.

Arvind also exports denim to over sixty-six countries worldwide. Denim exports

constitute of approximately 50% of the turnover.

Today Arvind is making yet another foray in the manufacture of the finest quality

Cotton Knits in the world. This new venture features a technical collaboration with

Alamac Knits Inc, USA to manufacture high value and high-fashion knits. With an

investment of US $50 million, the plant will produce fabric in both tubular and open

widths. The product range aims to offer widest choice in both tubular and open widths

in single (Jersey, Pique, Textures, Pointless, Fleece, French Terry, Jacquards in solids,

feeds and automatics) and double (Interlocks, Needle-outs, ottomans, Pointless,

Textures, Reversible, jacquards, Ribs in solids, feeds and automatics, Collars: Plains

and Jacquards) knits. It will manufacture a knits range from casuals to formal, activewear to sleepwear, for diverse use in men's, women's and children's clothing. Arvinds

large color and fabric library, stocking samples and a well equipped fabric resource

centre facilitates customers to access fabric that will enhance their lifestyles.



55/101



56/101



57/101

PORTFOLIO OF ARVIND LIMITED

Portfolio Percentage%

Denim 26%

Shirting 11%

Garment 16%

Brand/Retail 21%

Others 26%



58/101

MILESTONES ACHIEVED

1930 Arvind Limited was set up by Lalbhai Brothers.

1934 With sales reaching Rs. 45.76 lakhs and a profit of almost Rs. 3 lakhs, Arvind

establishes itself amongst the foremost textile units in the country.

1985 First Meter of Denim churned out.



59/101

1986 An uninterrupted record of not missing out on paying dividend to its

shareholders.

An established leader in fine & superfine cotton fabrics for Indian market.

Renovation: First company to bring globally accepted fabrics Denim, yarn dyed

shirting fabrics & wrinkle free gabardines to India.

1987 The largest zero discharge green effluent treatment plant in India.

Commitment to greener world.

First company to bring International shirt brand Arrow to India

First company to start dedicated retail outlets for Arrow brand

Awarded various awards for Highest exports and ISO.

1989 Largest denim & shirting in South Asia.

3rd Largest denim capacity in the world.

1990 Introduction of Premium Shirtings Division.

1993 Office set up in New York, London & Hong Kong.

1994 Arvind ventures into BrandsFlying Machine acquired..

BEGINNING OF AN ERA

1995 LEE commenced production. Introduction of Ruf & Tuf, ready to stitch denim.

1997 Commission of State-of-the-art manufacturing unit at Santej (Ahmadabad).

First Indian company to detribalize the cotton textile business from cotton fields

to apparel retailing.



60/101

1997-

1998

First company to introduce ERP SAP business solutions.

2002 Arvind` does a unique financial restructuring.

2004 Relocation of Mauritius Plant at the end of quota regime.

2008 Company launches 'Mega mart', now India's largest value apparel-retail chain

Largest portfolio of International brands: Lee, Wrangler, Nautical, Jan sport,

Kipling, Tommy, Arrow, US Polo, Izard, Pierre Cardin, Palm Beach, Cherokee,

hart Schaffer Marx.

FINANCIAL SCENARIO

Arvind limited is acclaimed in the Indian corporate field for its financial skills. Being

the phase of rapid growth or downturn the company has demonstrated swift, sharp and

robust financial acumen to navigate the company through different phases of economic

cycles. Arvind Mills was the first Textile Company from India to issue GDRS in the

year 1992-93. Highly complex financial restructuring exercise involving more than 80

domestic and international tenders, who the company implemented following the

major downturn in the business cycle during year 2000-2002, is considered to be the

benchmark for the Indian corporate. Arvind limited has been making judicious choice

of fund leasing avenues in the domestic as well as international markets so as to utilis

very efficient capital structure, which is in the tune with operating risks and enhances

the shareholders value.

The company has laid down the risk management policy to manage the financial risks

emerging out of currency and interest rate. It runs an active treasury desk so as to make

use of modern hedging tools available to manage financial risks.



61/101

Arvind Mills was the first Textile Company in India to implement ERP, SAP as back

as in the year 1997-98. The company follows best accounting practices to prepare its

financial statements as envisaged in the Indian and international accounting standards

SHAREHOLDING PATTERN OF ARVIND LIMITED

Particulars

NO.OF SHARES % OF TOTAL

Promoters 76908767 35.24%

Institution 42340700 19.40%

General public 98980382 45.36%

Grand total 218229849 100%

GRAPHICAL PRESENTATION OF NUMBERS OF

SHAREHOLDERS



62/101

FROM OLD TO NEW

Arvind limited is the flagship company of the Lalbhai Group and one of Indias largest

integrated textile manufacturers and branded apparel retailers. The re-branding

exercise comes in the wake of Arvind limited transforming itself from a pure fabric

company to a diversified business group focusing on branded apparel and retail.

Initially, when the company was set up as Arvind Mills limited, it was

simply about fabric. But gradually, it has spread its tentacles into retail and branded

apparel, which today contributes the maximum to the companys growth. Seven years

ago, with everything else constant, the logo was changed. In all, since Arvind Mills

was set up in 1931, this is the first extensive re-branding exercise it has taken up.

Sharp, but well rounded, the forms of the logotype represent

an organization that is integrated and works across the value

chain from stylish fabrics to iconic brands. With an element

of classicism, the logo symbolizes an organization that has a

rich heritage, while remaining contemporary through

changing times. The burgundy red denotes maturity, its rich

tones carrying a sense of depth and more than a hint of passion.No particular font has been used for the logo it is hand drawn and, therefore, an


Arvind Mills - old logo

Arvindlimited - new logo

62


63/101

exclusively crafted logo.

Highlighting the significance of the change in identity, Sanjay Lal bhai, chairman and

managing director, Arvind limited, says, Over eight decades, we have changed the

face of fashion by evolving constantly. As we get ready to address wider opportunities

to create wealth for our stakeholders, we have evolved new ways of thinking and a new

direction. The new identity reflects the shift in the corporate identity from a large

integrated textile player to a lifestyle solutions company and the name of the company

reflects the same trust but new opportunities.

Arvind limited has licensing relationships with international brands

such as Arrow, Gant, Cherokee, USPA, Hart Schaffner Marx, Sansa belt, Pierre Cardin

and a joint venture with VF Corporation, which covers Lee, Wrangler, Jansport,

Nautica, Kipling and Tommy Hilfiger. In addition, Arvind owns a number of

successful Indian brands such as Flying Machine, Newport, Excalibur and Ruf and

Tuf. It also owns the retail chain, Mega mart, which has 83 outlets in 30 towns.

Recently, Arvind limited opened a 40,000 square foot Mega mart outlet in Chennai.

ARVIND MILLS CHANGES NAME, FOCUS AND STRATEGY

Textile major Arvind Mills which has been recently going through a bad patch owingto rising rupee, reducing exports and falling margins is undertaking a business

transformation in a bid to become a billion dollar company.

The company has firstly changed its name from Arvind Mills limited to Arvind

limited with a new logo and identity to reflect a company which is diversified with

focus on branded apparel and retail. The promoters will increase their stake from 34%

to 47% and infuse Rs.188 crore capital into the company.

Also, half of the Rs.1400 crore debts which Arvind limited has would be repaid by

selling off land at Ahmedabad and Bangalore thus positively affecting the companys

profitability.

Arvind is now giving more focus to brands and retail which until now contributes 19%

of total revenue. It will also move to become an integrated textile player by producing

fabric as well as retailing it. With a combination of its own as well as licensed brands,

Arvind aims to become the largest apparel brand in India with focus on Tier II and III

cities.



64/101

Major emphasis would be on the value store format Megamart which is targeted to

achieve Rs.1000 crore sales in 3 years. Other than that Arvind plans to setup 250 small

format and 30 large format stores by 2012.The strategy may work out to be rewarding

for the company as it has a good portfolio of domestic and international, and has been

an established national player. The move would also help it to ward off any risk it

faces from the recession in export markets.



65/101

CONCEPT OF WORKING CAPITAL

A company invests its funds for long term purposes and short term operations. That

portion of a companys capital, which is required for minimum stock of raw material to

maintain continuity in production, minimum stock of finished goods to fulfill future



66/101

demand, payment of wages and salaries of labourers and employees is called Working

Capital. In other words, working capital is that part of the firms capital which is

required for financing short term or current assets such as debtors, inventories,

marketable securities and cash.

The word working capital comprises of two words working and capital. In trade and

industry, the word working with reference to capital means circulation of capital

from one form to another during day-to-day operations of the business whereas the

word capital refers to the monetary values of all the assets (tangible and intangible)

of the business.

There are numerous concepts of working capital as given by various accountants,

financial experts, entrepreneurs and economists. Important among them are

Balance Sheet or Traditional Concept

Operating Cycle Concept

FORMS OF WORKING CAPITAL

Working capital is the amount of funds required to cover the cost of operating the

enterprise. In other words, working capital may be defined as excess of current assets



67/101

over current liabilities. It may be classified in two ways i.e. (i) on the basis of balance

sheet concept and (ii) on the basis of time. These are illustrated by the following chart.

ON THE BASIS OF B/S CONCEPT

According to this concept, working capital is calculated on the basis of the balance

sheet prepared at a specific date. It is further classified it two forms- gross and net

working capital.



68/101

o GROSS WORKING CAPITALThe gross working capital refers to the

firms investment in current assets. The sum of current assets is a

quantitative aspect of working capital which emphasizes more on quantity

than its qualities.

o NET WORKING CAPITAL - Net working capital is the difference

between the current assets and the current liabilities or the excess of total

current assets over total current liabilities. Net working

capital may also be defined as, that part of a firms current assets which is

financed with long term funds. The net working capital may either be

positive or negative. When current assets exceed current liabilities, working

capital is positive and negative when current liabilities exceed current

assets.

ON THE BASIS OF TIME

Working capital is the amount required in different forms at successive stages of

operation during the net operating cycle period of an enterprise. The duration or time

required to complete the sequence of events right from purchase of raw

materials/goods for cash to the realization of sales in cash is called the operating cycle

or working capital cycle. On the basis of time working capital may be classified as (i)

Permanent or regular working capital; and (ii) Variable or temporary working capital.

o PERMANENT OR REGUALR WORKING CAPITAL;- It represents the

irreducible minimum amount that is permanently blocked in the business and

cannot be converted into cash in the normal course of business. It has following

characteristics :

a) It keeps on changing its form from one current asset to another

b) The size of working capital grows with the growth of the business

c) As long as the firm is a going concern, this part of working capital cannot

substantially be reduced.

o VARIABLE OR TEMPORARY WORKING CAPITAL:- Any amount over

and above the permanent working capital is variable or temporary working capital. It

fluctuates as per the change in the production and sale activities. It can further be

classified in following two forms:



69/101

a. Seasonal working capital The capital required to meet the seasonal demands of

the enterprise is called seasonal working capital. It is of short-term nature and thus

has to be financed from short-term sources like bank loan etc.

b. Specific working capital Specific working capital is that part of the working

capital which is required to meet unforeseen contingencies like slump, strike, flood,

war etc.

COMPONENTS OF WORKING CAPITAL

Working capital refers to the metric valuation of the current assets and the current

liabilities. These two are the basic components of working capital.

CURRENT ASSETS ARE :

(1) Inventories

(2) Sundry Debtors

(3) Bills Receivables

(4) Cash & Bank Balances

(5) Short term investment

(6) Advances such as advances for purchase of raw materials,

component and consumable stores, prepaid expenses etc.

CURRENT LIABILITIES ARE :

(1) Sundry Creditors

(2) Bills Payable

(3) Creditors for outstanding expenses

(4) Provision for tax

(5) Other provision against the liabilities payable within a period of 12 months

SOURCES OF WORKING CAPITAL



70/101

Funds available for a period of one year or less are called short-term finance. In India

short-term funds are used to finance working capital. Two most significant forms of

working capital are: trade credit, bank borrowing.

The use of trade credithas been increasing over the years in India. Trade credit as a

ratio of current assets is about 40 percent. It is indicated by the Reserve Bank of India

that trade credit has grown faster than the growth in sales.

Bank borrowing is the next important source of working capital finance. Before

seventies, bank credit was liberally available to firms. It became a resource after

eighties because of the change in the government policy.

Another form of short-term working capital finance which has recently developed in

India is Commercial Paper.

TRADE CREDIT

Trade credit refers to the credit that a customer gets from supplier of goods in the

normal course of business. In practice, the buying firms do not have to pay cash

immediately for the purchase made. It is a major source of financing for firms. In

India, it contributes to about one-third of the short-term financing.

Trade credit is mostly an informal arrangement, and is granted on an open account

basis. Once the trade links have been established between the buyer and seller, theyhave each others mutual confidence and trade credit becomes a routine activity. Open

account trade credit appears as sundry creditors on the buyers balance sheet. Trade

credit may also take the form of bills payable. A bill is formal acknowledgement of an

obligation to repay the outstanding amount.

It also involves some credit terms. These credit terms refer t the conditions under

which the supplier sells on credit to the buyer, and the buyer is required to repay the

credit. These conditions include the due date and the cash discount(if any) given forprompt payment.

BANK FINANCE



71/101

Banks are the main institutional sources of working capital finance in India. A bank

considers a firms sales and production plans and the desirable levels of current assets

in determining its working capital requirements. The amount approved by the bank for

the firms working capital is called credit limit. Credit limit is the maximum funds

which a firm can obtain from the banking system. In the case of firms with seasonal

businesses, banks may fix separate limits for the peak level credit requirement and

normal non-peak level credit requirement indicating the periods during which the

separate limits will be utilized by the borrower.

A firm can draw funds from its bank within the maximum credit limit sanctioned. It

can draw funds in the following forms: (a) overdraft, (b) cash credit, (c) bills

discounting, and (d) working capital loan.

a) OVERDRAFT

Under the overdraft facility the borrower is allowed to withdraw funds in excess of the

balance in his current account upto a certain specified limit during a

Documents

Working Capital Report Arvind Mills 2009 2010