Thursday, January 29, 2009

case study-unit-1

ARROW AND THE APPAREL INDUSTRY


Ten years ago, Arvind Clothing Ltd., a
subsidiary of Arvind Brands Ltd., a member
of the Ahmedabad based Lalbhai Group,
signed up with the 159-year old 'Arrow
Compar:y, a division of Cluett Peabody &
Co. Inc., US, for licensed manufacture of
Arrow Shirts in India. What this brought to
India was not just another premium dress shirt
brand but new manufacturing philosophy to its
garment industry which combined high productivity,
stringent in-line quality control, and a conducive
factory ambience.
Arrow's first plant, with a 55,000 sq. ft. area
and capacity to make 3,000 to 4,000 shirts a day,
was established at Bangalore in 1993 with an
investment of Rs 18 crore. The conditions insidewith
good lighting on the workbenches, high
ceilings, ample elbow room for each worker, and
plenty of ventilation, were a decided contrast to
the poky, crowded, and confined sweCltshops
characterising the usual Indian apparel factory in
those days. It employed a computer system for
translating the designed shirt's dimensions to
automatically mark the master pattern for initial
cutting of the fabric layers. This was installed, not
to save labour but to ensure cutting accuracy and
low wastage of cloth.
The over two-dozen quality checkpoints during
the conversion of fabric to finished shirt was unique
to the industry. It is among the very few plants in
the world that makes shirts with 2 ply 140s ~nd 3
ply 100s cotton fabrics using 16 to 18 stitches per
inch. In March 2003, the Bangalore plant couid
produce stain-repellant shirts based on
nanotechnology.
The reputation of this plant has spread far and
wide and now it is loaded mostly with export orders
from renowned global brands such as GAP, Next,
Espiri, and the like. Recently the plant was identified
by Tommy Hilfiger to make its brand of shirts for
the Indian market. As a result, Arvind Brands has
had to take over four other factories in Bangalore
on wet lease to make the Arrow brand of garments
for the domestic market.
In fact, the demand pressure frorn"global brands
which want to outsource from Arvind Brands, is so
great that the company has had to set up another
large factory for export jobs on the outskirts of
Bangalore. The new unit of 75,000 sq. ft. has cost
Rs 16 crore and can turn out 8,000 to 9,000 shirts
per day. The technical collaborators are the
renowned C&F Italia of Italy.
Among the cutting edge technologies deployed
here are a Gerber make CNC fabric cutting
machine, automatic collar and cuff stitching
machines, pneumatic holding for tasks like shoulder
joining, threat trimming and bottom hemming, a
special machine to attach and edge stitch the back
yoke, foam finishers which use air and steam to
remove creases in the finished garment, and many
others. The stitching machines in this plant can
deliver up to 25 stitches per inch. A continuous
monitoring of the production process in the entire
factory is done through a computerised apparel
production management system, which is hooked
to every machine. Because of the use of such
technology, this plant will need only 800 persons
for a capacity which is three times that of the first
plant which employs 580 persons.
Exports of garments made for global brands
fetched Arvind Brands over Rs 60 crore in 2002,
and this can double in the next few years, when the
new factory goes on full stream. In fact, with the
lifting of the country-wise quota regime in 2005,
there will be a surge in demand for high quality
garments from India and Arvind is already
considering setting up 'two more such high tech
export-oriented factories.,.
It is not just in the area of manufacture but also
retailing that the Arrow brand brought a wind of
change on the Indian scene. Prior to its coming,
the usual Indian shirt shop used to be a clutter of
racks with little by way of display. What Arvind
Brands did was to set up exclusive showrooms for
Arrow shirts in which the functional was combined
with the aesthetic. Stuffed racks and clutter were
eschewed. The products were displayed in such a
manner that the customer could spot their qualities
from a distance. Of course, today this has become
standard practice with many other brands in the
country, but Arrow showed the way. 8rI!l..w today
has the largest network of 64 exclusive outlets
across India. It is also present in 30 retail chains.
It branched into multi-brand outlets in 2001, and is
present in over 200 select outlets.
From just formal dress shirts in the beginning,
the product range of Arvind Brands has expanded
in the last ten years to include casual shirts, Tshirts,
and trousers. In the pipeline are light jackets
and jeans engineered for the middle-aged paunch.
Arrow also tied up with the renowned Italian
designer, Renato Grande, who has worked with
names like Versace and Marlboro, to design its
Spring / Summer Collection 2003. The company
has also announced its intention to license the
Arrow brand for other lifestyle accessories like
footwear, watches, undergarments, fragrances, and
leather goods. According to Darshan Mehta,
President, Arvind Brands Ltd., the current turnover
at retail prices of the Arrow brand in India is about
Rs 85 crore. He expects the turnover to cross Rs
100 crore in the next few years, of which about 15
per cent will be from the licensed non-clothing
products.
In 2005, A,...,:indBrands launched a major retail
initiative for all its brands. Arvind Brands licensed
brands (Arrow, Lee and Wrangler) had grown at a
healthy 35 per cent rate in 2004 and the company
planned to sustain the growth by increasing their
retail presence. Arvind Brands also widened the
geographical presence of its home-grown brands,
such as Newport and Ruf-n-Tuf, targeting small
towns across India. The company planned to
increase the number of outlets where its domestic
brands would be available, and draw in new
customers for readymades. To improve its presence
in the high-end market, the firm started negotiating
with an international brand and is likely to launch the
brand.
The company has plans to expand its retail
presence of Newport Jeans, from 1200 outlets
across 480 towns to 3000 outlets covering 800
towns.
For a company ranked as one of the world's
largest manufacturers of denim cloth and owners of
world famous brands, the future looks bright and
certain for Arvind Brands Ltd.
Company Profile
Name of the Company : Arvind Mills
Year of Establishment: 1931
Promoters : Three brothers- Katurbhai, Narottam Bhai and Chimnabhai
Division: Arvind Mills was split in
1993 into three unitstextiles,
telecom and garments. Arvind Brands
Ltd. (textile unit) is 100
per cent subsidiary of
Arvind Mills.
Growth strategy: Arvind Mills has grown
through buying-up of sick
units, going global and
acquisition of German
and US brand names.
Questions
1. Why did Arvind Mills choose globalisation as
the major route to achieve growth when domestic
market was huge?
2. How does lifting of 'Country-wise quota regime'
help Arvind Mills?
3. What lessons can other Indian businesses learn
from the experiences of Arvind Mills?

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