arvind mills - managerial accounts project

ARVIND MILLSSUBJECT – MA

PROF. KUMARSWAMI BODA

Presented by Atul Sande, Roll no. 04 Krupesh Shah , Roll no. 07 Vengadeshwaran , Roll no. 19 Pooja Chilap , Roll no. 32 Sagar Kuckian , Roll no. 36

INTRODUCTION

Industry :Textile

Founded :1931

Headquarters :Ahmedabad

Employees :2500+

Business Area :Spinning, weaving, processing and garment production.

Sector :Public Sector

INTRODUCTION

• Arvind Mills is the flagship company of the Lalbhai Group.

• They are producers of composite manufacturer of textiles with headquarters in Ahmedabad, Gujarat, India.

• India's largest denim manufacturer apart from being world’s fourth-largest producer and exporter of denim.

• In the early 1980s, the company brought denim into the domestic market, thus started the jeans revolution in India.

• Today it not only retails its own brands like Flying Machine, Newport and Excalibur but also licensed international brands like Arrow, Lee, Wrangler and Tommy Hilfiger, through its nationwide retail network. Arvind also runs a value retail chain, Megamart, which stocks company brands.

MILESTONES

• 1931 – Arvind Mills Ltd. is incorporated with share capital Rs.2525000 ($55000) in Ahmedabad.

• 1980 - Arvind records highest levels of profitability. The new strategy – ‘Reno vision’, points at changing the business focus from local to global, towards a high-quality premium niche market.

• 1987 – Modernization programme to triple the production of denim cloth and to produce double yarn fabrics for exports.

• 1991 – Arvind reached 100 million meters of denim per year, becoming the fourth largest producer of denim in the world.

• 1998 – Arvind Mills emerges as the world's third largest manufacturer of denim. Arvind Mills goes live with SAP R/3 ERP package in April 1998 in their new manufacturing units.

• 2003 – `P1+` rating by CRISIL, which indicates a very strong rating for their commercial paper.

• 2005 – Arvind creates a unique one-stop shop service on a global. Arvind Mills has managed to post a profit growth in excess of 80 per cent. Arvind Mills decides to buy entire stake in Arvind Brands from ICICI Ventures.

• 2010- Arvind launches ‘The Arvind Store’.

MILESTONES

Textile business at a glance

FINISHED GOODS AND RAW MATERIALS

PRODUCTION PROCESS

• Advanced Materials is a certified ISO 9001: 2008 manufacturing facility

producing high performance industrial fabrics

• The use of sophisticated ultramodern technology under the guidance of

world-renowned designers has enabled Arvind to deliver over 110 million meters of Denim per annum.

• It has the largest yardage and sampling mill in India, The spinning setup can produce a variety of counts for yarn types like compacts, slubs, signed yarn etc.

PRODUCTION PROCESS

• Arvind has patented technology to impart structural stability and superior

hand-feel for the difficult-to-handle fibers like Modal, Tencel, Excel and Viscose

• Arvind’s knits department has an annual knitting capacity of 5,000 tons, The knits

vertical has a fabric dyeing capacity of 5000 tons per annum and yarn dyeing capacity of 1800 tons per annum.

• The In house R&D department has successfully developed and perfected a number

of finishes adding value to our products and uniqueness to our range.

MARKETING STRATEGIES

• “The art of looking at the issue deeper than the obvious”

• Arvind Mills became a darling of stock exchange

• Porter’s five forces framework viz., rivalry among existing units, new entrants, barriers to new entry, how powerful are suppliers, how powerful are consumers and government policy

• Focusing on producing the highest quality of products

• Aggressive strategy to expand its operations by setting up world class manufacturing facilities

MARKETING STRATEGIES

• Company has continuously expanded its product portfolio

• The company came up with a massive debt-restructuring plan for the long-term debts being taken up in February 2001

• Distribution Expansion of Brands

• Launch of new brands to fill up Market Segment Opportunities

Distribution Expansion of Brands

Launch of New Brands to fill up Market Segment Opportunities

HR STRATEGY

• Induction of professional managers

• Changing the old age work habits due to shift in focus from domestic to

international trade

• Emphasis has always been on learning and skill enhancement.

• One of the more prolific employers in the state.

Particulars Rs. (in crores)

Total Sales 3780.29

Variable cost 1163.66

Contribution 2616.63

Fixed Cost 2334.07

Profit 282.56

BEP,PV RATIO AND MOS

BEP =Fixed Cost

Contribution per unit

BEP =Fixed Cost Overall PV

Ratio

Break even point is the level of sales at which profit is zero

Formulas:

Or

The data of total sales , Varible cost , Contribution, fixed cost & Profit are given in the table:


P.V Ratio =Contribution

* 100Sales

P.V Ratio shows the relationship between a company's earnings (or losses) and its sales

P.V Ratio

=2616.63

* 100 = 69.22%3780.29

Particulars Rs. (in crores)Total Sales 3780.29

Variable cost 1163.66

Contribution 2616.63Fixed Cost 2334.07

Profit 282.56


Since we didn’t have the per unit cost , we are calculating the BEP using the 2nd formula

BEP Calculation:

BEP =Fixed Cost Overall PV

Ratio

BEP

=2334.07

= 3371.9569.22


MOS = Total Sales - BEP Sales

Margin of Saftey(MOS) is the excess of budgeted or actual sales over the break even volume of sales. It stats the amount by which sales can drop before losses begin to be incurred. The higher the margin of safety, the lower the risk of not breaking even

Below is the formula for MOS :

MOS =

3780.29 - 3371.95

= 408.34

STOCK MARKET ANALYSIS

Price chart for last five years

1.1.2009 – 17.95

BSE (5 Year Trend)

1.1.2010 – 39.10

1.1.2011 – 71

1.1.2012 – 64.95

1.1.2013 – 101.75

30.9.2013 – 77.90

FUTURE GROWTH OF COMPANY

Canvas of 600 – 700 cities in India.

Share of Brands & Retail as well as fabric retail expanding to 40%

To add 100 Million Meters fabric manufacturing capacity: cap ex Rs. 850 cr.

Revenue set to grow at 20%

FUTURE GROWTH OF INDUSTRY

• Indian Textiles Industry is on upswing - Sharp increase in domestic demand for apparel (brands & retail business growing by about 30% since last 12 months) leading to increase fabric demand

• Most of the fabric manufactures have full order book - Global demand recovery following reduced inventories and improved sales - Apprehending that Chinese costs will rise due to wage & interest rate increases as well as Yuan appreciation, several large buyers have not only expressed interest but started purchasing textile products from India

• Indian Apparel Brand & Retail business is on upswing - Set to grow at 25% + over next 3-4 years on account of

• Burgeoning middle and higher middle class• Improved sentiments on account of improved macro-economic

factors and positive forecast

• Significant addition to organized retail space : reasonable rent

arvind mills - managerial accounts project

Business

arvind brands

india arvind

arvind store

introduction arvind

obvious arvind mills

production process arvind

current fy arvind

arvind mills subject