Arvind Mills' Restructuring Plan

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. The emergence of power looms in the 1970s further aggravated the problems of Arvind Mills.

The government's indirect tax system at that time also reduced the profitability of its product lines. In the mid-80s, to survive the onslaught of the small-scale power loom sector, the composite mills,⁴ with their higher overheads had to change their strategies. It became imperative for them to switch to areas in which the power loom sector could not compete, viz, value added products.

Until 1987, like any other textile company, Arvind Mills had a presence only in conventional products like sarees, suitings and low value shirting, and dress materials. Realizing the bleak growth prospects for textiles in general, Arvind Mills identified denim as a niche area and set up India's first denim manufacturing unit in 1986 at Naroda Road, Ahmedabad.

To deal with competition from the power loom sector, which rolled out vast quantities of inexpensive fabrics, and to cope with the rising cost of raw materials, Arvind Mills diversified into indigo-dyed blue denim; high quality, cotton-rich, two-ply⁵ shirting, and Swiss voiles⁶...