CHAPTER - III PROFILE OF THE STUDY UNITS ARAVIND MILLS The Aravind Mills was set up with the pioneering effort of the Lalbhai brothers in 1931. With the best of technology and business acumen, Aravind has become a true Indian multinational, having chosen to invest strategically, where demand has been high and quality required has been superlative. Today, The Aravind Mills Limited is the flagship company of Rs.20 billion (US$ 500 million) Lalbhai Group. Aravind Mills has set the pace for changing global customer demands for textiles and has focused its attention on select core products. Such a focus has enabled the company to play a dominant role in the global textile arena. With its presence across the textile value chain, the company endeavors to be a one-stop shop for leading garment brands. Forevision and Technology has brought Aravind to be one of the top three producers of Denim in the world, and on its way becoming the Global Textile Conglomerate. Aravind is already making its presence felt in Shirting‟s, Knits and Khakhis fabrics apart from being all set to create ripples in the ready to wear Garments world over. The Evolution 1930 was a year the world suffered a traumatic depression. Companies across the globe began closing down. In UK and in India the textile industry in particular was in trouble. At about this time, Mahatma Gandhi championed the Swadeshi Movement and at his call, people from all India began boycotting fine and superfine fabrics, which had so far been imported from England. In the midst of this depression one family saw opportunity. The Lalbhais reasoned that the demand for fine and superfine fabrics still existed. And any Indian company that met this demand would surely prosper. The three brothers, Kasturbhai, Narottambhai and Chimanbhai decided to put up a mill to produce this superfine 45 fabric. Next they looked around for state-of-the-art machinery that could produce such high quality fabric. Their search ended in England. The best technology of that time was acquired at a most attractive price. And a company called Aravind Mills was born. Aravind Mills started with a share capital of Rs 2,525,000 ($55,000) in the year 1931. With the aim of manufacturing the high-end superfine fabrics Aravind invested in very sophisticated technology. With 52,560 ring spindles, 2552 doubling spindles and 1122 looms it was one of the few companies in those days to start along with spinning and weaving facilities in addition to full-fledged facilities for dyeing, bleaching, finishing and mercerizing. The sales in the year 1934, three years after establishment were Rs.45.76 lakhs and profits were Rs.2.82 lakhs. Steadily producing high quality fabrics, year after year, Aravind took its place amongst the foremost textile units in the country. In the mid 1980‟s the textile industry faced another major crisis. With the power loom churning out vast quantities of inexpensive fabric, many large composite mills lost their markets, and were on the verge of closure. Yet that period saw Aravind at its highest level of profitability. There could be no better time, concluded the Management, for a rethink on strategy. The Aravind management coined a new word for it new strategy – Renovision. It simply meant a new way of looking at issues, of seeing more than the obvious and that became the corporate philosophy. The national focus paved way for international focus and Aravind‟s markets shifted from domestic to global, a market that expected and accepted only quality goods. An in-depth analysis of the world textile market proved an eye opener. People the world over were shifting from synthetic to natural fabrics. Cottons were the largest growing segments. But where conventional wisdom pointed to popular priced segments, Renovision pointed to high quality premium niches. Thus in 1987-88 Aravind entered the export market for two sections. Denim for leisure and fashion wear and high quality fabric for cotton shirting‟s and trousers. By 1991 Aravind reached 1600 million meters of Denim per year and it was the third largest producer of denim in the world. 46 In 1997 Aravind set up a state-of-the-art shirting, gabardine and knits facility, the largest of its kind in India, at Santej. With Aravind‟s concern for environment a most modern affluent treatment facility with zero affluent discharge capability was also established. Year 2005 is a watershed year for textiles. With the mulitifiber agreement getting phased out and the disbanding of quotas, international textile trade is poised for a quantum leap. In the domestic market too, the rationalizing of the cenvat chain and the growth of the organized retail industry is likely to make textiles and apparel see an explosive growth. Aravind has carved out an aggressive strategy to verticalize its current operations by setting up world-scale garmenting facilities and offering a one-stop shop service, of offering garment packages, to its international and domestic customers. With the Indian economy poised for rapid growth, Aravind brands with its international licenses of Lee, Wrangler, Arrow and Tommy Hilfiger and its own domestic brands of Flying Machine, Newport, Excalibur and Ruf & Tuf, is setting it‟s vision on becoming the largest apparel brands company in India. PHILOSOPHY WE BELIEVE In people and their unlimited potential. In content and focus in problem solving. In teams for effective performance. In intellect & its power. WE ENDEAVOUR To select, train and coach people to obtain higher responsibilities. To nurture talent to build leaders for tomorrow's corporation. To reward, celebrate and activate all intellectual business contributions. WE DREAM Of excellence in all endeavours. Of mutual benefit and prosperity. Of making the world a better place to live in. We Make Things Happen. At Aravind, it is firmly believed that a successful company must play an active role in the development of the society from which it springs. Besides pursuing its business goals, it should also be responsible corporate citizen. It is 47 because of these beliefs that Aravind is always on the forefront of extending a helping hand for the needy, downtrodden and for the society at large. Aravind has always been actively involved in the educational institution, hospitals and research institutions of Ahmedabad, its hometown. It co-pioneered the world renowned Indian Institute of Management, Ahmedabad (IIMA), and helped set up the Ahmedabad Textile Industry Research Association (ATIRA), and The Kasturbhai Lalbhai Textile Training Center to develop and enhance the skills of textile workers. The Lalbhais – a Historical Perspective The Lalbhais are descendents of Seth Shantidas (c.1590-1659), a famous jeweler, financier and businessman of the seventeenth century. Shantidas is known to have even financed the mighty moghul empire and was the first to be conferred with the title of Nagarsheth. Khushalchand (1680-1748) grandson of Shantidas had saved the city of Ahmedabad from the marauding Maratha army in 1725 by paying a ransom of Rs. 5 Lakh on behalf of the whole city. The current surname is derived from Lalbhai Dalpatbhai the great grandson of Himabhai (1785-1858) son of Khushalchand. Lalbhai was born around the time when the first textile factory in the city went into production. The first manufacturing company of the Lalbhai family Saraspur Manufacturing Company was established in 1897 which was into producing cotton yarn. During the intensifying Swadeshi movement the second company Raipur Mills was established in 1905. Due to untimely death Lalbhai Dalpatbhai the reins of his businesses were handed over to his young sons including a seventeen year old Kasturbhai Lalbhai. Kasturbhai is widely acknowledged to be the father of modern Indian textile industry. Kasturbhai started the first large scale textile mill under the name of Asoka Mills in 1920 with a capital of Rs.12 Lakh at a time when the largest mills in the region were built with not more than Rs. 5 Lakh. 1930-31 saw the resurgence of second Swadeshi movement coinciding with the great depression. While different entrepreneurs reacted to the situation differently Kasturbhai saw this as the decade of prosperity and growth and established the flagship Aravind Limited in 1931 with an authorized capital of Rs. 25.25 Lakh. 48 Kasturbhai had also floated mills for families of his three sisters under the name of Aruna Mills in 1928 and Nutan Mills in 1931. With the expansion Kasturbhai came to occupy the position of the biggest textile magnate in the country. Few groups could claim to have made such great strides during one of the worst periods in India‟s industrial history. After continuously successful period of four decades in the pre-independence era, the group entered into other fields such as dyes, pharmaceuticals, chemicals, etc. The first diversification started in 1939 with Anil Starch Limited. Atul Products Limited was established in 1952 for manufacturing textile and other dyestuff. In the same campus as Atul existed the joint ventures with Ciba-Geigy called Cibatul, with American Cynamid called Cynamid of India and with ICI of UK called Atic Industries and as the time progressed the JV partners separated amicably and these companies exist in India today as full representatives of these global giants. The group took over the then sick company Ahmedabad Laxmi Cotton Mills Co. Ltd. and merged with Aravind Limited and the unit was renamed as Ankur Textiles. The unit currently under Aravind Products Limited is today the country largest organized player in the voiles market. The group also invested in Anup Engineering Limited engaged in fabrication and set up Amol Dicalite in collaboration with General Refractories Limited, U.S.A for manufacturing filter aids and perlite products.