Feedback
A pioneer B2B media and publication platform connecting with Fashion Brands & Retail in India

Arvind rethinks growth strategy, focus shifts to garmenting

Arvind rethinks growth strategy focus shifts to garmenting 002Textile major, Arvind, a global leader in apparel manufacturing is on a roll. The company, in less than five years, plans to divest almost all its looms in its two manufacturing facilities in Naroda and Santej in Gujarat to its partners. Almost 250 million meters of textiles that the company manufactures, will be contracted to these partners. The company will however continue to process these in its facilities and convert them into apparels. This process will comprise around 40 per cent of Arvind’s textile production in the next few years.

And as Sanjay Lalbhai Chairman and Managing Director explains, they will outsource all textile production in the next five years. Shut down 1,500 looms and retain only a processing and a designing centre that will help them provide complete solutions to 10 most important global clients, and over 10 domestic clients.

New initiatives to fuel growth

The company’s garmenting ambition coincides withArvind rethinks growth strategy focus shifts to garmenting 001 employment generation policies of Jharkhand and Gujarat. Both states will provide Arvind a payroll incentive or subsidy of Rs 4,000 to Rs 7,000 per month for every worker it employs. The company, in the next couple of years, will employ at least 5,000-8,000 women in each facilities in the two states to produce apparel. The new Ethiopian units too would focus on garmenting and offer duty-free access to European markets.

Arvind also plans to switch from cotton to manmade fiber which is cheaper, more functional and dominant in the sportswear and athleisure segments. Additionally, the company will launch its own eponymous garment brand to confront rival brands like Raymond. These initiatives will help Arvind lift its ROCE from the current 10 per cent to 18 per cent by financial year 2022-23.

Brands to break even this fiscal

Achieving similar improvement in the loss-making Arvind Fashions, may not be possible at the moment. Arvind’s branded apparel business comprise 20 foreign brands in India. Of these, four are power brands—the ones with the highest earning potential— Flying Machine, Arrow, U.S. Polo and Tommy Hilfiger. The EBITDA margin for these four increased from 9.5 per cent in FY12 to 12.2 per cent in FY18. The other 15 or so are hovering around an EBITDA margin of 5 and 6 per cent for the past six years.

These brands are still in investment phase and as they scale up, operating leverage will improve profitability and capital efficiency. The company will break even across all brands this financial year, a promise that it didn’t fulfill last year. Yet, analysts are hopeful.

Post demerger, Arvind Fashions will have to fund its own growth as it won’t be able to depend on the textile business’ cash flows. The company may prune its brand portfolio but doesn’t commit to it. It believes with the Goods and Services Tax and the new insolvency and bankruptcy law, time to think big has arrived.

 

LATEST TOP NEWS
  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10

Toonz Retail on a major product, retail expansion spree

Toonz Retail on a major product, retail expansion spree

The Spring/Summer’19 collection of Toonz Retail is based on the theme: Spring garden, Fun Fiesta and Blue Safari for its Wow Mom range aimed at new born to three years... Read more

Celio to expand fashion horizon with a linen range

Celio to expand fashion horizon with a linen range

“Celio brings a breath of freshness to Indian fashion with its chic and relaxed menswear,” says Abhishek Shetty, Head-Marketing, PR & Loyalty. The brand in its upcoming collection will focus... Read more

PwC estimates drastic fall in online sales by 2022 with e-com policy curbs

PwC estimates drastic fall in online sales by 2022 with e-com policy curbs

As per a draft analysis by global consultants PwC new investment restrictions from foreign companies for its e-commerce sector, which includes giants such as Amazon.com Inc and Walmart-owned Flipkart, could... Read more

Sonari makes women feel beautiful with its new range of bras

Sonari makes women feel beautiful with its new range of bras

“We aspire to make our consumer embrace what she is and fall in love with themselves with our products,” says Dipesh Kubadia, Director of the leading lingerie brand Sonari. The... Read more

July captures domestic market with stylish range

July captures domestic market with stylish range

“Believing that you are beautiful is the first step towards understanding your worth as a woman,” says Sumant Bajaj, Managing Director, Pearl Clothing, owner of premium apparel brand July. The... Read more

New trends to shape Indian luxury industry in 2019

New trends to shape Indian luxury industry in 2019

As per Assocham, the luxury industry was expected to reach $30 billion by 2018-end. But unstable political atmosphere, floundering rupee, growing uncertainty hindered growth with the global slowdown of 2020... Read more

BAMA, Bengaluru based new association to organise maiden trade fair in February

BAMA, Bengaluru based new association to organise maiden trade fair in February

Bengaluru-based ready-to-wear clothing manufacturers recently collaborated to form the ‘Bangalore Apparel Manufacturers Association’(BAMA ), a registered forum that would facilitate collaboration, connection between the manufacturers. Since its inception, the forum... Read more

Now, Cantabil aims to make a mark in kidswear, eyes 12% growth this year

Now, Cantabil aims to make a mark in kidswear, eyes 12% growth this year

“Our new kid’s collection will take some time to come to the level of our existing collections,” notes Deepak Bansal, Director, Cantabil. The brand is already and established name in... Read more

Ultimo empowers full-figured women with its new shapewear collection

Ultimo empowers full-figured women with its new shapewear collection

Now, women can bid adieu to their uneven bulges with Ultimo’s new collection that provides customers with three cutting edge shapewear designs targeting different areas of the body. “The collection... Read more

PrettySecrets aims to be the ultimate lingerie brand for Indian women

PrettySecrets aims to be the ultimate lingerie brand for Indian women

Leading lingerie brand PrettySecrets, looks at innerwear as the foundation of a person’s outwear. “Based on this philosophy, we provide products that are high on functionality and comfort while being... Read more

MOST POPULAR NEWS
Go to top