Arvinds Case Study Arvind

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According to the estimates available, Arvind will sell approximately 80 million metres of fabric (includes domestic value-added and plain fabrics as well as exports) for the year 1997-98.
This is an increase of 8.92 per cent over the last year when it sold approximately 74 million metres of fabric. The trouble is that this growth is too less. Its sales forecast and viability required it to function at 80 per cent of the built-up capacity. That meant an output of at least 100 million metres (of 120 million metre build-up) for the operation to be viable.
This did not happen. Industry sources, security analysts and sources close to the company say that Arvinds fabric distributors are sitting over Rs 35 crore worth of inventory, its converters
…show more content…
According to industry experts, a little after July it started becoming apparent that the demand in the export market was slowing down. Says an exporter, Our sales were 30 per cent lower than expected. No sweat. Arvind with its global capacities could operate at low costs and still compete.
Anyway, the domestic market was always there. A company document about the financial highlights of April-September 1997 stated: The only way of countering such forces would be by catering to more discerning customers abroad. The company believes it has increased its market share in the domestic market to 70 per cent in the first half of 1997-98. In the domestic market, the focus will be on Ruf-n-Tuf and Newport.
With increased capacities in place Arvind could always push more fabric in the domestic market and work the trade. This option turned into necessity after November when three new players entered the market. Raymond entered at the higher end (ring denim) of the market with a capacity of 3-3.5 lakh metre per month. Mafatlal-Burlington JV entered the market with about 5 lakh metre per month. Century Textiles entered with almost 3 lakh metre per month. Both these players were lower down the price segment with open-end denim. While Raymonds fabric was priced at Rs 130-135 per metre, the other two priced their products in Rs 115-95 per

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