The turnaround case scenario on Arvind Mills:
History:
Arvind (ARVND), established in 1931 as Arvind Mills Ltd, the flagship of the Lalbhai group, is the largest textile company in India. It was the first to introduce the globally accepted fabric, denim, to India in 1986. Currently, Arvind is the leading manufacturer of denim, with a manufacturing capacity of 108mmt (Million Metric Ton) p.a. Company is also the largest producer of textile fabrics in India making shirting, voiles, khakis and knits, with a manufacturing capacity of 130mmt p.a. Arvind is the largest cotton textiles manufacturer in the country, with an installed fabric capacity of over 200mmt per annum. It is also one of the leading denim fabric manufacturers in the world.
Concern: …show more content…
In the mid 1990s, Arvind Mills' undertook a massive expansion of its denim capacity in spite of the fact that other cotton fabrics were slowly replacing the demand for denim. The expansion plan was funded by loans from both Indian and overseas financial institutions. With the demand for denim slowing down, Arvind Mills found it difficult to repay the loans, and thus the interest burden on the loans shot up. Problems that started in Arvind Mills –A high wage structure, low productivity and surplus labor in the textile mills rendered its businesses unviable in most the products categories in which it competed. In the late 1990s, Arvind Mills ran into deep financial problems because of its debt burden. As a result, it incurred huge losses in the late …show more content…
Forty-three out of fifty-four lenders approved the plan. As part of the restructuring, lenders offered over Rs 7.5 billion under the company's various debt buyback schemes. Some of the banks agreed to the buyback at a 55% discount on the principal amount, while some agreed to a five year rollover for which they would be entitled to interest plus the principal. Some banks also agreed to a ten year rollover for which they would be paid a higher rate of interest plus principal. The debt revamp was expected to reduce Arvind Mills' interest burden by
History:
Arvind (ARVND), established in 1931 as Arvind Mills Ltd, the flagship of the Lalbhai group, is the largest textile company in India. It was the first to introduce the globally accepted fabric, denim, to India in 1986. Currently, Arvind is the leading manufacturer of denim, with a manufacturing capacity of 108mmt (Million Metric Ton) p.a. Company is also the largest producer of textile fabrics in India making shirting, voiles, khakis and knits, with a manufacturing capacity of 130mmt p.a. Arvind is the largest cotton textiles manufacturer in the country, with an installed fabric capacity of over 200mmt per annum. It is also one of the leading denim fabric manufacturers in the world.
Concern: …show more content…
In the mid 1990s, Arvind Mills' undertook a massive expansion of its denim capacity in spite of the fact that other cotton fabrics were slowly replacing the demand for denim. The expansion plan was funded by loans from both Indian and overseas financial institutions. With the demand for denim slowing down, Arvind Mills found it difficult to repay the loans, and thus the interest burden on the loans shot up. Problems that started in Arvind Mills –A high wage structure, low productivity and surplus labor in the textile mills rendered its businesses unviable in most the products categories in which it competed. In the late 1990s, Arvind Mills ran into deep financial problems because of its debt burden. As a result, it incurred huge losses in the late …show more content…
Forty-three out of fifty-four lenders approved the plan. As part of the restructuring, lenders offered over Rs 7.5 billion under the company's various debt buyback schemes. Some of the banks agreed to the buyback at a 55% discount on the principal amount, while some agreed to a five year rollover for which they would be entitled to interest plus the principal. Some banks also agreed to a ten year rollover for which they would be paid a higher rate of interest plus principal. The debt revamp was expected to reduce Arvind Mills' interest burden by