RESEARCH PAPER

The Lalbhai group- Arvind Mills

History
In the year 1930, the world suffered a traumatic depression.
Companies across the globe began closing down. The textile
industry was in trouble particularly in UK and in India. 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 the 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 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 Arvind Limited was born.
Arvind Limited 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 Arvind invested in very sophisticated technology. 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. Steadily producing high
quality fabrics, year after year, Arvind took its place amongst the
foremost textile units in the country.

Founding fathers- The Lalbhais

The Lalbhais can trace their descent from Seth Shantidas (c.1590-
1659), who was a dominant figure in the business and civic life of
the city. He enjoyed the patronage of the Moghul emperors to whom
he was a trusted jeweller and also prominent financers of his time.
His grandson, Khushalchand, (1680-1748) too occupied a place of
prominence in the business and social life of the city.
The current surname, Lalbhai, is derived from Lalbhai Dalpatbhai the
great great great grandson 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. 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 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. Kasturbhai had also floated
mills for families of his three sisters under the name of Aruna Mills in
1928 and Nutan Mills in 1931 and Ahmadabad New Cotton Mills in
1938.
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.

The Lalbhai Family

Lalbhai Dalpatbhai
Lalbhai was born around the time when the first textile factory in the
city of Ahemdabad went into production. The first manufacturing
company of the Lalbhai family, Saraspur Manufacturing Company
was established in 1897. It started with producing cotton yarn.
During the intensifying Swadeshi movement the second company
Raipur Mills was established in 1905. Due to untimely death of
Lalbhai Dalpatbhai the reins of his businesses were handed over to
his young sons Kasturbhai Lalbhai, Narottambhai Lalbhai and
Chimanbhai Lalbhai.
GENERATION I

Kasturbhai Lalbhai, Narottambhai Lalbhai and Chimmanbhai

Lalbhai

Kasturbhai’s school education took place in Ahmadabad and he

matriculated in 1911. In 1912, when he was studying in college, his
father died and being the second son, he was asked to discontinue
his studies so as to help in the family business. His father Lalbhai
had divided property among his brothers only in the recent past; as
his and his sons’ share, Lalbhai had received Raipur mills, a new
establishment. By the time
of Lalbhai's death, the operations of the mill had not yet stabilised;
hence, Kasturbhai had to take care of operations closely. He started
off as a timekeeper in the mill, but fed up with the repetitive nature
of the job, he started working with suppliers of the mill and travelled
far and wide to understand the supplier market. The boom in
demand during and post-World War I helped him in stabilising the
operations of the firm.
In 1931, he founded Arvind Mills that manufactured fine and
superfine varieties of clothes as opposed to the coarse variety of
cloth produced till then by the Indian mills.
In 1952, he started Atul Limited (literally beyond compare) which is
located in Atul , India’s first modern dyestuff manufacturer in
collaboration with American Cyanamid. It was inaugurated by India’s
first Prime Minister, Jawaharlal Nehru. With time, Kasturbhai started
handing over the operations of his businesses to his relations. He
devoted more time to public activities.
He was awarded the Padma Bhushan, India’s third highest civilian
honour in 1968 by the Government of India. He retired from business
in 1977 and died in 1980 in Ahmadabad.
One of the most important roles played by Kasturbhai was in
promoting institutions that would serve the country and the industry
well. As a youth, he had to drop mid-way out of college to help in his
family business, and this unfulfilled desire for higher education found
expression in his institute building. As a director of the Reserve Bank
of India from 1937 to 1949, he ensured that Indian employees were
groomed well to run operations in an Independent India.
He along with Sheth Shri Amrutlal Hargovindas, Shri Ganesh
Mavlankar started the Ahmadabad Education Society in 1936, which
later evolved into the Gujarat University. The society also donated
land for the establishment of the Indian Institute of Management
Ahmadabad (IIMA). Kasturbhai, along with Vikram Sarabhai, was the
driving force behind IIMA. He was on the board of IIMA but declined
to accept the position of its chairman. He commissioned world-
renowned architects such as Louis Kahn and Charles Correa to
design some of these institutes.
He promoted ATIRA – The Ahmadabad Textile and Industries’
Research Association before independence, which proved to be
effective in increasing the competitiveness of the mills in
Ahmadabad. To promote engineering and technology in India he
built engineering college in 1948 just adjacent to Gujarat university
on his father's name Lalbhai Dalpatbhai college of engineering. He
also established the Lalbhai Dalpatbhai Institute of Indology in 1962.
Thus, he was not only known as a businessman but also an institute-
builder.

GENERATION II
Arvind Lalbhai

Born on April 3, 1918, Arvind Lalbhai was among three brothers who
founded the Arvind Mills in 1931, which today is amongst the top
textiles companies of the country and is the flagship company of the
Rs. 2,000 crore Lalbhai Group.

He was also the president of the Ahmadabad Mill Owners

Association, the Gujarat Chamber of Commerce and Industries and
the Gujarat Small Scale Industries Federation.

He served the textile industry in several capacities, including as

chairman of the textile committee in 1980 and the Indian Cotton
Mills Federation in 1982.
He also worked on various committees and panels of state and
Central government and was a member of the Customs and Central
Excise Advisory Council of India. — PTI. He passed away in August
2001 at the age of 89.

Siddharth Lalbhai

Kasturbhai’s son, Siddharth Lalbhai is a chemical engineer. He has

dedicated his entire life to the development of Atul, a unique story
not only of a business enterprise, but also of human vision and
endeavour for the progress of rural India.

Siddharth Lalbhai accorded equal value to creation of wealth and

service to society. The principles, he upheld, of ethics in business
and trusteeship in governance, the personal qualities, he lived by, of
uncompromising integrity, simplicity and determined low profile, the
single-minded devotion he gave to the tasks on hand and the
sustained commitment he had of taking the right steps, in the right
direction, with the right motives will continue to remain a guiding
force.

Shrenik Lalbhai, Niranjan Lalbhai, Sudhirbhai Lalbhai,

Ajaybhai Lalbhai are other members of the second generation of
the family holding important positions in the group companies.

GENERATION III
Sanjay Lalbhai

Born in the year 1954, Sanjay Lalbhai holds a Bachelors' degree in

science from Gujarat University and Master's degree in Management
Studies from the University of Bombay. He is associated with the
Company since 2003. He is one of those renowned entrepreneurs
who have managed to put Ahmadabad on the global map in the
context of its successful textile industry, as Managing Director of the
Arvind Mills Limited, a large integrated textile mill.

His other directorships include Arvind Mills Ltd., Arvind Spinning Ltd.,
Mauritius, Amol Dicalite Ltd., Arvind Worldwide Inc., USA, Arvind
Worldwide (Mauritius) Inc., and Arvind Overseas Mauritius Ltd.
Sunil Lalbhai
Sunil S Lalbhai, 49, has been on the Board of Directors of Atul Co.
since 1984.
He obtained MS degree in Chemistry from the University of
Massachusetts and MS degree in Economic Policy & Planning from
Northeastern University. After his studies, he worked as a trainee
with Imperial Chemical Industries plc in the UK for 6 months. He
joined Atul Ltd on January 1, 1983 and became Managing Director on
July 1, 1984. Since August 29, 2007, he is Chairman and Managing
Director of the company.
In 1991, he was appointed by the Government of India as the
Convenor of the Sub-Group on Dyestuffs and Intermediates for
preparing a Perspective Plan for Chemical Industry until 2000. In
1991, he was appointed by the Government of Gujarat as the
Convenor of the Technical Panel on Chemicals and Dyestuffs
constituted for
preparing a blueprint for the development of Dyestuff Industry until
2002. In 2006, he was appointed by the Government of India as the
Convenor of the Sub-Group on Dyestuffs and Dye-intermediates for
preparing a draft report for Chemical Industry for 11th Five Year Plan
(2007-12).
He is a Director on the Board of Wyeth Ltd and Navin Fluorine
International Ltd. He is the Chairman of the Remuneration
Committee and a Member of the Audit Committee of NFIL. He is a
member of the Governing Council of Lalbhai Dalpatbhai Institute of
Indology and Shree Vallabh Shikshan Sangeet Ashram.

Samveg Lalbhai
Samveg A Lalbhai, 48, has been a director of Atul Co. since January
2000. Previously he was a Managing Director of The Arvind Mills
Limited. He is actively associated with Ahmadabad Textile Mills
Association, Gujarat Chamber of Commerce and Industry, Indian
Cotton Mills Federation, Ahmadabad Textile Industry's Research
Association and FICCI. He is currently Chairman of The Anup
Engineering Ltd.

Anang Lalbhai : Anang Lalbhai who is the son of Ajaybhai Lalbhai is

currently the MD and CFO of the Arvind products, a subsidiary od the
Arvind mills.

GENERATION IV
Punit Lalbhai : Punit, 27, the elder son of Sanjay Lalbhai, is a post-
graduate in environmental science from Yale University. He was
appointed as the chief manager of the project division in 2008.

Kulin Lalbhai : Kulin, 24,the younger son of Sanjay Lalbhai and an

electrical engineer from Standford University, joined the family
business in 2009. He is handling energy management and
alternative feed for the power plant, besides heading the group’s
organic farming foray on 10,000 acres in the Vidarbha region of
Maharashtra.

The Lalbhai group of companies:

Textiles/ Yarns/ Garments

Arvind Mills Limited

Arvind Mills is the flagship company of the Lalbhai Group. The sixty
year heritage of operating at the cutting edge of marketing and
technology helped Arvind put India on the world denim map. Arvind
is the second largest source of imported denim in the USA and the
third largest in the UK. Arvind is the leading denim brand in Dubai,
and one of the largest in the Middle East.

Arvind Products Limited

The company is a subsidiary of The Arvind Mills Limited. The
principal business segments of the company include manufacturing
and marketing of Voiles fabrics,
 Bottomweight fabric (khakis) and Yarn. The company operates
through its divisions viz: Arvind Intex (with both ring and open end
yarn manufacturing under one roof), Arvind Cotspin
(manufacturing 100% cotton yarn and double yarn in a wide range of
counts and varieties) and Ankur Textiles (manufacturing of voiles)

Others

Atul Products Limited

The Rs.600 crore Atul Products, set up in 1947, is one of Asia's
largest and greenest chemical complexes. The company has grown
to become India's largest dyestuffs

manufacturer, making and marketing over 250 varieties of

chemicals and intermediates, from basic commodity chemicals to
speciality intermediates required for the agrochemical, defence,
dyestuff, leather, paper, pharmaceutical and textile industries. Atul
exports to more than 50 countries. Over the years, Atul Ltd joined
hands with American Cyanamid Corp (1952), Imperial Chemical
Industries plc (1955) and Ciba-Geigy Ltd (1960) to form respectively
3 joint venture companies, namely, Cyanamid India Ltd, Atic
Industries Ltd and Cibatul Ltd respectively.

Arvind Telecom
Arvind Telecom manufactures C-DoT based RAX's. The
company has tied up with E. F. Johnson (USA), Comdial
(USA) and France Telecom to offer value- added telecom
services, and is ideally poised to capitalize on the
liberalization of India's telecom sector. Arvind Telecom
is a division of The Arvind Mills Limited.

Anup Engineering Limited

Anup Engineering is one of the leading Engineering companies
engaged in manufacturing process equipment for Chemicals,
Refineries, Petrochemicals, Pharmaceuticals, Fertilizers, Drugs and
Allied Industries. The company is on the lookout for collaborations
with international leaders, to strengthen its' technological base.
Anup Engineering is an associate company of The Arvind Mills
Limited.

Lalbhai Realty Limited

Lalbhai Realty is Arvind's foray into the India's booming real estate
business. The company intends to capitalize on the demand for
housing and real estate in India, by setting up state-of-the-art office
and residential complexes. Projects are already underway in
Mumbai, Delhi, Bangalore and Ahmadabad. Lalbhai Realty is an
associate company of The Arvind Mills Limited.

Amol Dicalite Limited

Amol dicalite limilted is a group company with the business ranging
from Textile clothing to Filter Aids to Perlite Products.
A SWOT analysis on The Arvind Mills
Strengths
1. The Arvind mills has a strong portfolio of domestic and
international brands. It has international licenses of Lee,
Wrangler, Arrow, Tommy Hilfiger and its own domestic brands
like Flying Machine, Newport, Excalibur and Ruf & Tuf.
2. One of the advantages that The Arvind Mills has is the use of
latest manufacturing tools.
3. It has a wide geographical presence. It is the second largest
source of imported denim in the USA and the third largest in
UK. Arvind is the leading denim brand in Dubai and one of the
largest in Middle East.
4. One of the biggest strengths of the group is their belief in joint
family which result in unity and thus blankets any difficulties
that the sister companies faces.

Weakness
1. The company lacks fresh ideas. They are following their old
strategies.
2. The presence of the Arvind Mills is felt only in big cities.
3. They are not doing enough to build their brand equity.
4. The rising prices of inputs like raw material.

Opportunities
1. There is a rapid growth in the age group 15-44 years, because
the buying capacity has increased over the years. This is a
huge opportunity for any textile company.
2. Ability and willingness in India.
3. The retail scenario is changing in the country. Even the small
cities have excess to every product.
 4. As textile Industry identified as core sector of India and its
shifting to developing countries like India there are plethora of
opportunities for Arvind Mills.

Threats
1. Huge number of competitors like Raymond, Bombay Dyeing,
Madura garments.
2. Cheap imports from countries like China, Thailand and
Bangladesh.
3. The rate of excise duty.
4. Competition from small town stores and speciality stores
adapting aggressive growth strategies as well as eyeing big
cities.

Future trends and strategies for the company

Looking at the distinctive competencies achieved by Arvind Mills

through vertical integration, diversification and huge capacity setup,
the future strategy for Arvind Mills can be described based on
strategy development framework.
Nearly 50% of the Arvind Mills revenue is generated from the
exports market. But Arvind Mills need to defend the market by
focusing on process innovation and following a cost player strategy.
Improving its supply chain and inventory management through
further tying up with farmers and use of technology are some of the
process innovations it should follow.
In the exports market it should deepen its base by supplying new
products through product innovation like in the denim category
manufacturing ring denim and product mixes with Lycra, which will
establish it in new categories. It should also work on improving its
existing client base by following a client development strategy.
In the domestic market the growing Indian economy and hitherto
explored rural market, provide it with opportunities to spread its
legs. Its strategy to establish itself in two different segments niche
and mass market would help it in capturing these markets.
Affordable brands like Newport can be a good start to penetrate the
rural market and the middle class segment in the urban market.
While the niche brands like Arrow will cater the needs of the niche
consumers.
Arvind Mills should concentrate on domestic retailing and branding
which could give it higher margins and a brand image, also as the
number of working woman in India is increasing, developing the
women formal wear market could give it a significant edge. An
established brand will be able to command a brand loyalty and will
give it a sustained competitive advantage. By building prime
locations brands can be further exploited while giving additional
competitive advantage.

SYMBIOSIS INSTITUTE OF
MANAGEMENT STUDIES
PRINCIPLES AND PRACTICES OF
MANAGEMENT
ASSIGNMENT 1
Research paper: Lalbhai Group-
Arvind Mills
Name : Aditi Puri

Class : IA

Roll No.: 06

Batch : 2010-2012

PRN: 10020441006