exhibit 04: denim manufacturing capacity of leading indian manufacturers (in million meters)

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exhibit 05: strategy planning map of arvind mills




The stated strategy of Arvind Mills is, With its presence across the textile value chain, the
company endeavors to be a one-stop shop for leading garment brands.Arvind Mills has always
demonstrated focus on two aspects.One, it has catered to the premium segment within the mass
market, which implies focusing on retailers like Levis and designers like Tommy Hilfiger, who
demand large quantities.
Second, the company has vertically integrated its operations initially from spinning to fabric
finishing, and now up to retailing of branded apparel.
Changing business strategy in sync with market conditions has been critical to Arvind Mills
survival. This, in turn, has been possible only because of clarity of values, vision, clear
articulation, and a strong, motivated top management.

the renovision strategy

Before the 1980s, Indian textile manufacturing mostly comprised manual handlooms. During the
1980s, small manufacturing units using power looms to manufacture high- quality fabric at lower
prices became abundant, much to the detriment of players such as Arvind Mills.
Even though Arvind Mills managed to be profitable on the strength of its brand name and its
commitment to quality, it clearly understood that this was not sustainable. It then
exhibit 04: denim manufacturing capacity of leading indian manufacturers (in million meters)
120


decided to revamp its strategy, calling it Renovision strategy or a new way of looking at issues,
of seeing more than the obvious.Under the Renovision strategy, Arvind Mills decided to focus
on the international market instead of the domestic market.The main reason was that the
international market (largely the US) expected and accepted only quality goodsfabrics
manufactured accurately according to technical specifications, along with timely deliveries.
These two requirements meant that manufacturers would have to invest in capital-intensive
technology, large scale as well as better management of operations.Power looms could not match
up with the technology and scale required for quality control, logistics and automation. Another
observation on the international market was that demand was shifting from synthetic fabrics to
cottons. The Renovision strategy focused on high-quality premium niches instead of popularly
priced segments. Thus in 1987-88, Arvind Mills entered the export market in two areasdenim
for leisure wear, and high-quality fabric for cotton shirting and trousers.

According to Ajit Mantagani, former CEO of the Denim Business, The Renovision strategy was
not a one-time exercise. Rather, it was an evolutionary process that started in the early 1980s,
was executed in the mid-1980s and branded as the Renovision strategy much later in the early
1990s. The strategy culminated in Arvind Mills setting up its first denim facility in 1985-86, with
a capacity of 10 million metres.The objective of this strategy was to foster a culture excellence
and surpass international standards instead of resting on the laurels of being the best in India.
The strategy saw intensive training sessions, was responsible for in new senior management from
leading multinationals operating in India, and converted new product development into an
investment for achieving market leadership from being viewed as just a cost.Significantly,
Arvind Mills started out small capacity for denim (but sufficient to engage large international
buyers) to learn the tricks of the trade for a few years. The approach its salesmen also had to be
completely different. Earlier, salesmen first made new products and then pushed them down the
throats of relatively weak and small domestic distributors. Scores of distributors would sell them
to smaller distributors and so on.In effect, distributors or customers of the company had little
bargaining power vis-a- vis Arvind Mills. The international market was the opposite. Arvind
Mills would have little bargaining power compared to its customers. The new products would
have to be developed in consultation with customers., The attitude to sales had to be completely
different. At times, this meant new types of salespersons, new incentive structures and new
responsibilities.
Morever, selling Indian denim in theoverseas market was not an easy task. According to Anand
Parekh, President of the Denim Division in the 1990s, initially, , a lot of buyers asked Arvind
Mills to keep the Made in India tag off their products and Arvind Mills had to accommodate
their requests. However, by the 1990s, the label was proudly flaunted in all the markets, when
Arvind Mills became the worlds third largest denim maker. Once the company sensed that it
was well positioned to become a large global player in denim, it decided to ramp up its
production capacity and restructured the organization accordingly.
the current strategy
Vertical integration of their supply chains is an increasing trend among the worlds leading
textile mills. Textile fabric is the most important input for clothing. In turn, conversion of fabric
to an item of clothing and retailing of clothing under a brand of name are two steps in the value
chain, which add significant value to textiles. Large clothing retail chains are able to exert
significant influence over their supply chain, as entry into retailing is more difficult than entry
into manufacturing or trading in textiles.
It is against such a backdrop that Arvind Mills decided to move further up the supply chain to
become closely integrated with select retailers as well as retailing brands. It now retails brands
under license from other companies, apart from its own brands. Another driver toward forward
integration was the downturn in denim prices.
It was decided that Arvind Mills would take all its fabrics and go to premium customers with
volumes such as Zara Benetton, Esprit, Marks & Spencer, Banana Republic and GAP.The
strategy was to service them with a very different charter of requirements. For instance, provide
them with design inputs and instead of selling them fabrics, become solution providers from
cotton to finished garments.
Arvind Mills decided to focus on shifting into the high- margin business from simply
manufacturing denim fabric for garment manufacturers and traders. This implied: first supplying
fabrics under long-term contracts to buyers in the premium segment; second, manufacturing
garments with the fabrics and not just the fabrics; and last, marketing its own brands.
the planning process
At the management level, there is an awareness that while strategic planning is a good-to-use
term in your resume, it does not really apply to India the way it does globally.Strategic planning
at Arvind Mills is at best a continuous process, based on free flow of information and ideas
across the organization. There is no distinct, formal strategic planning process, which dictates the
targets and vision of the company concluded into an untouchable sacrosanct document. Rather,
strategic planning for the group as a whole is integrated with the annual budgeting exercise,
which includes quarterly reviews. People ranging from middle level management to the Board
of Directors are included in it. The Management Information System (MIS) team is associated
with division to help the line management in this exercise. Formal planning for the product mix
and other types of formal strategic planning exercises are carried out separately depending on the
requirements. What is important to note is that the informal planning process takes place
simultaneously along with the formal planning process, and the informal process serves as a
forum for discussion. Conflict is resolved through communication between formal and informal
groups and the ultimate decision is made by a person high up in the chain of command and
responsibility.