Blue jeans have been synonymous with Arvind Ltd for more than 3 many years. After all, the 88-year-old Ahmedabad-based textile company was once the first to fabricate the indigo-dyed blue denim fabric in the country.
Sanjay Lalbhai, 62, now chairman of Arvind, recalls how the first lot of indigo-dyed denim, made by Arvind someday between late 1985 and 1986, was once technically not denim at all. A thick white cotton twill was once revealed indigo-blue the usage of a saree-printing system after which tested to look if it washed like denim.
Lalbhai explains that for a fabric to be considered original blue denim, the warp or the longitudinal yarn in the cloth needs to be dyed with indigo prior to the weaving. The transverse thread, or the weft, will have to be white. The afterwash look of the material is the key.
By 1986, the Arvind most sensible brass have been mulling over denim options for 2 years. That adventure had started a few years earlier when former adman-turned-entrepreneur Rajiv Badlani set up the Flying Machine jeans emblem in 1980. Badlani, who had married into the Lalbhai family, was once importing denim to make Flying Machine as suitable subject material was once not available in India. He sought after Arvind to make denim in India. Arvind, on its section, was once looking for a product to take on the competition in textiles, which was once turning into an increasing number of commoditised.
The company, then referred to as Arvind Mills, got Flying Machine in 1984. But the equipment needed to make original denim required large investments and no one was once certain it might paintings. Therefore, the first “India-made denim” came out of a saree-printing system, and went on to turn into Flying Machine jeans. The emblem’s success led Arvind to put money into the generation required to make denim in 1986 and set up India’s first denim production plant, at Naroda Road in Ahmedabad.
By March 1987, Arvind Mills was once generating original denim. Since then, the Naroda factory has noticed many inventions in cloth weaving and dyeing — for instance, the use of a rota-spray system for space dyeing hand woven ikkat. However, Arvind’s most complex weaving unit today is in Gandhinagar’s Kalol, about 23 km from Naroda.
Set up in 2011 with German company PD Composites, the three way partnership weaves glass fibre into technical textiles. Glass fibre textiles are used to make factory-wear, auto-interiors and windmill blades, as well as structural pieces that can be utilized to make ladders or even bridges. The two devices look vastly other. While the one in Kalol is blank and fashionable, the one in Naroda is an ordinary previous textile mill. White, the color of glass fibre, dominates the brand new factory, whereas indigo dye dominates the material and partitions on the Naroda unit.
If denim was once Arvind’s large bet in the 1980s, technical textiles are one in all its bigger bets now, at the side of other businesses equivalent to water and wastewater treatment as well as garment manufacturing for international avid gamers. These could be the way forward for Arvind Ltd, which completed a three-way department of the company in November 2018.
The branded retail play (which incorporates Arrow, GAP, Tommy Hilfiger and Flying Machine) is Arvind Fashions Ltd and the a lot smaller engineering arm has been hived off as Anup Engineering. More than 60% of the value of the unique company has now moved to the branded retail arm.
Arvind Ltd now desires to make use of the textile business to fund more recent businesses. But the key trick will be to ensure there is a steadiness between older businesses that supply a higher return on capital and the more recent ones that need investments to ensure minority shareholders get their due.
Lalbhai says: “The demerger was once logical. Shareholders had invested in Arvind because they sought after to be invested in one of the crucial other businesses. A collection of mature businesses didn't make sense, both for shareholders or for analysts. The demerger was once aimed toward unlocking value.”
When other businesses mature, he says, they can even be spun off, similar to the manufacturers business. The significance of branding is not misplaced on the Lalbhais, the descendants of royal jewellers of the Mughal era. Their family surname was once Sheth. However, in the 1960s, they determined to make use of Lalbhai as the surname after Lalbhai Dalpatbhai — the great-grandfather of Sanjay Lalbhai who set up the Saraspur Manufacturing Company in 1897 to produce cotton yarns, thus beginning the Arvind legacy.
In an interview with ET Magazine, Lalbhai says he dropped Sheth from his identify whilst in school. But he indicators his identify as Sanjay Shrenik, the usage of his own father’s identify as the second identify. “My father would additionally signal as Shrenik Kasturbhai, the usage of best my grandfather’s identify.” But his sons Kulin and Punit use Lalbhai of their signatures.
The demerger of surnames aside, a query everybody is looking is if splitting the company had something to do with a succession plan for Kulin and Punit, both of their thirties. There is already a definite visible department of labor between the brothers. Punit Lalbhai deals with complex fabrics and new businesses equivalent to water, whilst Kulin Lalbhai focuses extra on Arvind’s branded business as well as the company functions. Father Sanjay says the trinity operates the hands of the firms together. He stresses that there is not any “artificial department” in the business.
“There are certain areas that Kulin and Punit paintings on, four or five areas each and every. But there are also functions that lower throughout companies. As a group we now have at all times believed in letting professionals run the business. Not just now, however from my grandfather’s time. We are available in when the promoter’s intervention can be helpful and effective,” the senior Lalbhai says.
The Lalbhais classify their businesses into 3 categories: mature businesses like textiles (denim, wovens, voiles); garments business or ones that promise great value introduction like manufacturers and engineering; and in the end water, glass fibre textiles and Arvind Internet, the digital business that helps offline outlets migrate to omnichannel retailing.
In the brand new avatar of Arvind Ltd, the textiles business brings in 80% of the gang’s running earnings. Lalbhai says many parts of the business, like denim as an example, have fully depreciated equipment and an almost negative operating capital — as in addition they purchase subject material on credit. It goes asset-lite by tying up with third events for elementary weaving and dying, as an alternative of changing older machines. Therefore, with little capital (fairness+debt) at play, this business has an excessively high return on capital hired.
With textiles, Lalbhai is raring to ramp up the garment manufacturing business of Arvind, which has a labour-intensive model. The company is attempting out a brand new model at its garment making devices in Jharkhand’s capital Ranchi and in Bavla in Gujarat by providing dormitories for women, especially from tribal areas. The workers are also imparted skill coaching or college education, and are expected to finish the learning in four years.
There are competitive plans to extend the workforce in Bavla to 12,000 from 1,500 and in Ranchi to 7,500 from 2,000. The plan is to have more than 80% women workers in both places. The company additionally benefits from the payroll incentives of these state governments.
While those centres construct capability, Arvind may be providing international garment manufacturers solutions equivalent to cloth analysis and construction and manufacturing, amongst others. It has already invested in a unit in Ethiopia to profit from the tax advantagefrom there to Europe. An example of the analysis and construction paintings is the speedy action chinos — trousers that can take the damage and tear of sporting actions — that Arvind developed recently.
Vicksit Mehta, the mustachioed creative director of Arvind, whose group worked on creating the trousers, says sustainability is the key to succeed in the global garment space today and far of the analysis that happens at Arvind focuses on that.
Mehta, who attire in jackets and ties that look the rest however formal, has been with the company for 15 years. Under Mehta, the creative arm of Arvind has notched up many wins, operating with all most sensible international garment manufacturers. So will the renewed garments play and the more recent businesses enthuse the market to put money into Arvind Ltd again?
In a post-demerger file in November, Kashyap Pujara, the top of analysis at Axis Capital, said: “Investors were mainly playing Arvind for the scale-up of its B2C manufacturers & retail business which requires quite lower capital depth (versus textiles) and commands a long way better valuation multiples (15-20x EBIDTA). Investors seen the mainstay business, textiles (~80% of consolidated EBIDTA) as robust cash cow which funded the manufacturers & retail scale-up.”
Chairman Lalbhai says the focal point should be extra on the return on capital hired (ROCE) and less on the profits prior to passion, tax, depreciation and amortisation (EBITDA), as the textile business is now moving towards an asset-lite model and, subsequently, capital investments can be less. The two businesses that were moved out of Arvind Ltd — Anup Engineering and Arvind Fashions — were listed in early March.
There were preliminary stutters, as the stock value of Arvind Fashions kept hitting its upper circuit filter every day. The mixed market capital has inched as much as Rs 8,989 crore on March 29, 11% more than its pre-demerger value in November. Around the time demonetisation was once introduced in November 2016, the Arvind Ltd scrip had crossed Rs 10,000 crore in market capitalisation — and that should be the first milestone for the mixed valuations of the brand new entities to go.
Sanjay Lalbhai, 62, now chairman of Arvind, recalls how the first lot of indigo-dyed denim, made by Arvind someday between late 1985 and 1986, was once technically not denim at all. A thick white cotton twill was once revealed indigo-blue the usage of a saree-printing system after which tested to look if it washed like denim.
Lalbhai explains that for a fabric to be considered original blue denim, the warp or the longitudinal yarn in the cloth needs to be dyed with indigo prior to the weaving. The transverse thread, or the weft, will have to be white. The afterwash look of the material is the key.
By 1986, the Arvind most sensible brass have been mulling over denim options for 2 years. That adventure had started a few years earlier when former adman-turned-entrepreneur Rajiv Badlani set up the Flying Machine jeans emblem in 1980. Badlani, who had married into the Lalbhai family, was once importing denim to make Flying Machine as suitable subject material was once not available in India. He sought after Arvind to make denim in India. Arvind, on its section, was once looking for a product to take on the competition in textiles, which was once turning into an increasing number of commoditised.
The company, then referred to as Arvind Mills, got Flying Machine in 1984. But the equipment needed to make original denim required large investments and no one was once certain it might paintings. Therefore, the first “India-made denim” came out of a saree-printing system, and went on to turn into Flying Machine jeans. The emblem’s success led Arvind to put money into the generation required to make denim in 1986 and set up India’s first denim production plant, at Naroda Road in Ahmedabad.
By March 1987, Arvind Mills was once generating original denim. Since then, the Naroda factory has noticed many inventions in cloth weaving and dyeing — for instance, the use of a rota-spray system for space dyeing hand woven ikkat. However, Arvind’s most complex weaving unit today is in Gandhinagar’s Kalol, about 23 km from Naroda.
Set up in 2011 with German company PD Composites, the three way partnership weaves glass fibre into technical textiles. Glass fibre textiles are used to make factory-wear, auto-interiors and windmill blades, as well as structural pieces that can be utilized to make ladders or even bridges. The two devices look vastly other. While the one in Kalol is blank and fashionable, the one in Naroda is an ordinary previous textile mill. White, the color of glass fibre, dominates the brand new factory, whereas indigo dye dominates the material and partitions on the Naroda unit.
If denim was once Arvind’s large bet in the 1980s, technical textiles are one in all its bigger bets now, at the side of other businesses equivalent to water and wastewater treatment as well as garment manufacturing for international avid gamers. These could be the way forward for Arvind Ltd, which completed a three-way department of the company in November 2018.
The branded retail play (which incorporates Arrow, GAP, Tommy Hilfiger and Flying Machine) is Arvind Fashions Ltd and the a lot smaller engineering arm has been hived off as Anup Engineering. More than 60% of the value of the unique company has now moved to the branded retail arm.
Arvind Ltd now desires to make use of the textile business to fund more recent businesses. But the key trick will be to ensure there is a steadiness between older businesses that supply a higher return on capital and the more recent ones that need investments to ensure minority shareholders get their due.
Lalbhai says: “The demerger was once logical. Shareholders had invested in Arvind because they sought after to be invested in one of the crucial other businesses. A collection of mature businesses didn't make sense, both for shareholders or for analysts. The demerger was once aimed toward unlocking value.”
When other businesses mature, he says, they can even be spun off, similar to the manufacturers business. The significance of branding is not misplaced on the Lalbhais, the descendants of royal jewellers of the Mughal era. Their family surname was once Sheth. However, in the 1960s, they determined to make use of Lalbhai as the surname after Lalbhai Dalpatbhai — the great-grandfather of Sanjay Lalbhai who set up the Saraspur Manufacturing Company in 1897 to produce cotton yarns, thus beginning the Arvind legacy.
In an interview with ET Magazine, Lalbhai says he dropped Sheth from his identify whilst in school. But he indicators his identify as Sanjay Shrenik, the usage of his own father’s identify as the second identify. “My father would additionally signal as Shrenik Kasturbhai, the usage of best my grandfather’s identify.” But his sons Kulin and Punit use Lalbhai of their signatures.
The demerger of surnames aside, a query everybody is looking is if splitting the company had something to do with a succession plan for Kulin and Punit, both of their thirties. There is already a definite visible department of labor between the brothers. Punit Lalbhai deals with complex fabrics and new businesses equivalent to water, whilst Kulin Lalbhai focuses extra on Arvind’s branded business as well as the company functions. Father Sanjay says the trinity operates the hands of the firms together. He stresses that there is not any “artificial department” in the business.
“There are certain areas that Kulin and Punit paintings on, four or five areas each and every. But there are also functions that lower throughout companies. As a group we now have at all times believed in letting professionals run the business. Not just now, however from my grandfather’s time. We are available in when the promoter’s intervention can be helpful and effective,” the senior Lalbhai says.
The Lalbhais classify their businesses into 3 categories: mature businesses like textiles (denim, wovens, voiles); garments business or ones that promise great value introduction like manufacturers and engineering; and in the end water, glass fibre textiles and Arvind Internet, the digital business that helps offline outlets migrate to omnichannel retailing.
In the brand new avatar of Arvind Ltd, the textiles business brings in 80% of the gang’s running earnings. Lalbhai says many parts of the business, like denim as an example, have fully depreciated equipment and an almost negative operating capital — as in addition they purchase subject material on credit. It goes asset-lite by tying up with third events for elementary weaving and dying, as an alternative of changing older machines. Therefore, with little capital (fairness+debt) at play, this business has an excessively high return on capital hired.
With textiles, Lalbhai is raring to ramp up the garment manufacturing business of Arvind, which has a labour-intensive model. The company is attempting out a brand new model at its garment making devices in Jharkhand’s capital Ranchi and in Bavla in Gujarat by providing dormitories for women, especially from tribal areas. The workers are also imparted skill coaching or college education, and are expected to finish the learning in four years.
There are competitive plans to extend the workforce in Bavla to 12,000 from 1,500 and in Ranchi to 7,500 from 2,000. The plan is to have more than 80% women workers in both places. The company additionally benefits from the payroll incentives of these state governments.
While those centres construct capability, Arvind may be providing international garment manufacturers solutions equivalent to cloth analysis and construction and manufacturing, amongst others. It has already invested in a unit in Ethiopia to profit from the tax advantagefrom there to Europe. An example of the analysis and construction paintings is the speedy action chinos — trousers that can take the damage and tear of sporting actions — that Arvind developed recently.
Vicksit Mehta, the mustachioed creative director of Arvind, whose group worked on creating the trousers, says sustainability is the key to succeed in the global garment space today and far of the analysis that happens at Arvind focuses on that.
Mehta, who attire in jackets and ties that look the rest however formal, has been with the company for 15 years. Under Mehta, the creative arm of Arvind has notched up many wins, operating with all most sensible international garment manufacturers. So will the renewed garments play and the more recent businesses enthuse the market to put money into Arvind Ltd again?
In a post-demerger file in November, Kashyap Pujara, the top of analysis at Axis Capital, said: “Investors were mainly playing Arvind for the scale-up of its B2C manufacturers & retail business which requires quite lower capital depth (versus textiles) and commands a long way better valuation multiples (15-20x EBIDTA). Investors seen the mainstay business, textiles (~80% of consolidated EBIDTA) as robust cash cow which funded the manufacturers & retail scale-up.”
Chairman Lalbhai says the focal point should be extra on the return on capital hired (ROCE) and less on the profits prior to passion, tax, depreciation and amortisation (EBITDA), as the textile business is now moving towards an asset-lite model and, subsequently, capital investments can be less. The two businesses that were moved out of Arvind Ltd — Anup Engineering and Arvind Fashions — were listed in early March.
There were preliminary stutters, as the stock value of Arvind Fashions kept hitting its upper circuit filter every day. The mixed market capital has inched as much as Rs 8,989 crore on March 29, 11% more than its pre-demerger value in November. Around the time demonetisation was once introduced in November 2016, the Arvind Ltd scrip had crossed Rs 10,000 crore in market capitalisation — and that should be the first milestone for the mixed valuations of the brand new entities to go.
India's oldest jeans company is weaving a new business
![India's oldest jeans company is weaving a new business]()
Reviewed by Kailash
on
March 31, 2019
Rating:
