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Shri Shankaracharya Institute of Technology and Management: A Seminar Report and Viva ON Arvind Mill Textile Industry
Shri Shankaracharya Institute of Technology and Management: A Seminar Report and Viva ON Arvind Mill Textile Industry
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INDEX
1. Introduction…………………………………………………………… 3-4
2. Sector synopsis………………………………………………………..5
5. Organization structure……………………………………………….14-17
6. Enriching lifestyle……………………………………………………..18
12. Conclusion………………………………………………………………..32
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INTRODUCTION
OF
Arvind Mills was incorporated on 12th December June 1931, by Sanjay Lalbhai's
grandfather, Kasturbhai Lalbhai, and his two brothers, Narottam and Chimanbhai, in
Ahmadabad. When Sanjay Lalbhai took over the reins in 1975, Arvind Mills was at the
crossroads.
By the late 1990s, Arvind Mills was the third largest manufacturer of denim in the world,
with a capacity of 120 million meters. Therefore, in the early 1990s, Arvind Mills initiated
massive expansion of its denim capacity. With the best of technology and business
acumen, Arvind has become a true Indian multinational, having chosen to invest
strategically, where demand has been high and quality required has been superlative.
Today, the Arvind Mills Limited is the flagship company of Rs.20 billion (US$ 500
million) Lalbhai Group. In the regular changing scenario of fashion, company has
maintained its focus on its core product which gives an upper hand in the competition
through the world. With its presence across the textile value chain, the company
Technology has brought Arvind to be one of the top three producers of Denim in the
world, and on its way becoming the Global Textile Conglomerate, Arvind is already
making its presence felt in Shirting’s, Knits and Khakis fabrics apart from being all set to
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In 1997 Arvind set up a state-of-the-art shirting, gabardine and knits facility, the largest
of its kind in India, at Santej. With Arvind’s concern for environment a most modern
effluent treatment facility with zero effluent discharge capability was also
year 1931. With the aim of manufacturing the high-end superfine fabrics Arvind invested
offering a one-stop shop service, by offering garment packages to its international and
domestic customers. 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
Arvind at its highest level of profitability. There could be no better time, concluded the
Management, for a rethink on strategy. The Arvind management coined a new word for
it new strategy – Renovation. It simply meant a new way of looking at issues, of seeing
more than the obvious and that became the corporate philosophy.
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,
superfine fabric.
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SECTOR SYNOPSIS
With a total market size (2004-05) of US$ 38 billion, the textiles domestic market
The textile industry functions in the form of clusters (roughly 70 in number) across
India, producing 80 per cent of the country’s total textile. It is diverse, with the hand-
spun and hand woven sector at one end of the spectrum, and the capital intensive,
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HISTORY AND OPERATION
Arvind Mills was established in 1931. It was founded by the three brothers Kasturbhai
Lalbhai, Narottambhai Lalbhai and Chimanbhai Lalbhai one of the leading families of
Ahmadabad.
1931 – Arvind Mills Ltd. is incorporated with share capital Rs.2525000 ($55000)
crepes, shirtings, coatings, printed lawns & voiles cambrics, twills gaberdine etc.
production of denim cloth and to produce double yarn fabrics for exports. The
new product groups identified were the indigo dyed blue denim, high quality two-
ply fabrics for exports, and special products such as butta sarees, full voils and
dhoties.
1991 – Arvind reached 100 million meters of denim per year, becoming the fourth
1992 – The Company increased the production of denim cloth by 23,000 tons per
composite mill for producing annually 120 lakh meters of high quality shirting
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1994 – The Company's operations were divided into 3 units viz., Textile Division,
strengthened and the relaunched `Flying Machine' and 'Ruggers` brand were
strengthened.
The Company reported a fire in the goods godown & folding packing
Arvind Mills sets up the anti-piracy cell for the first time in India to curb large
scale counterfeiting of their highly successful brands Ruf & Tuf and Newport
jeans.
Arvind Mills adopts the franchisee system for the manufacture and distribution
1998 – Arvind Mills emerges as the world's third largest manufacturer of denim.
1999 – Arvind Mills sets a two-month deadline for hiving off its garments division
2000 – CRISIL downgrades the debenture issues of Arvind, indicating that the
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2001 – Arvind Mills defaults on a $125 million floating rate note issue and puts
forward a debt restructuring proposal that could significantly reduce its debt
Arvind Mills posts a net loss of Rs 44.59 cror for the quarter ended September 30,
2001.
2003 – For the fourth quarter, Arvind Mills witnesses 280% growth in the net
profit
Arvind Mills Ltd is assigned a `P1+` rating by CRISIL, which indicates a very strong
financial performance.
2005 – For the fourth quarter in a row, Arvind Mills has managed to post a profit
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BOARD OF DIRECTORS
Mr. Sanjay S. Lalbhai is the Chairman and Managing Director of the Company. He is a
associated with the Company for more than 30 years. He also holds directorships in
Limited, Arvind Worldwide Inc., USA, Arvind Worldwide (M) Inc. and Arvind Overseas
(M) Ltd.
Mr. Jayesh K. Shah is a Whole time Director with the designation of Director and Chief
Accountant and has been with the company for more than 23 years. He has a
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ARVIND PRODUCTS
The Arvind Mills was set up with the pioneering effort of the Lalbhai brothers in 1931.
With the best of technology and business acumen, Arvind has become a true Indian
multinational, having chosen to invest strategically, where demand has been high and
quality required has been superlative. Today, The Arvind Mills Limited is the flagship
company of Rs.20 billion (US$ 500 million) Lalbhai Group.Arvind 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
Technology has brought Arvind to be one of the top three producers of Denim in the
world, and on its way becoming the Global Textile Conglomerate. Arvind is already
making its presence felt in Shirting’s, Knits and Khakis fabrics apart from being all set to
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B) ARVIND PRODUCTS LIMITED
The company is a subsidiary of The Arvind Mills Limited. The principal business
Bottom weight fabric (khakis) and Yarn. The company operates through its divisions via:
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
OTHERS
A) ATUL LIMITED
The Rs.600 crore Atul Products, set up in 1947, is one of the 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 chemical and
A group company with the business ranging from Textile clothing to Filter Aids to Perlite
Products.
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C) ANUP ENGINEERING LIMITED
Drugs and Allied Industries. The company is equipped with Laboratory to carry out
various destructive and non-destructive tests apart from an independent quality control
department
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ARVIND INNOVATION
Arvind mill has a strong Research and Development focus on process improvement,
cost reduction and new product development. This is evident in the fact that Arvind mill
continuously modifies its production process to enhance flexibility on the use of various
types and quality of cotton. To further meet customer needs, Arvind mill has also
State-of-the-art technology and equipment have made Arvind mill one of the top three
producers of denim in the world, paving the way for the Company to emerge as a global
textile conglomerate. This cutting edge position comes to Arvind mill courtesy
Rope-dyeing, Air-Jet, Projectile and Wet Finishing. It’s only natural that Arvind mill
quality fabrics are in high demand in the markets of Europe, US, West Asia, the Far
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ORGANISATION OF ARVIND MILL
HUMAN RESOURCES
Human Resources for a business enterprise needs a conceptual outlay to enable
Fundamentally, business situations have changed the world over. The rise of the
intellect has been imminent. Human resource planning can no longer confine itself to
the traditional sources for hiring and retaining. The human resources of today see their
roles having changed from that of a doer to that of a thinker and on most occasion “a
thinker doer”.
Be The Foundation That Integrates Culture, Vision & Values , Creates an Environment
PHILOSOPHY
WE BELIEVE:
In people and their unlimited potential.
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WE ENDEAVOUR
WE DREAM
FINANCE
Arvind Mills is acclaimed in the Indian corporate field for its financial skills. Be it the
phase of rapid growth or downturn; the company has demonstrated swift, sharp and
robust financial acumen to navigate the Company through different phases of economic
cycles. Arvind Mills was the first Textile Company from India to issue GDRs in the year
domestic and international lenders which the Company implemented following the major
benchmark for the Indian corporate. Arvind Mills has been making judicious choice of
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fund-raising avenues in the domestic as well as international markets so as to construct
very efficient capital structure, which is in the tune with operating risks and enhances
the shareholders’ Value.The Company has laid down the Risk Management policy to
manage the financial risks emerging out of currency and interest rate risks. It runs an
active treasury desk so as to make use of modern hedging tools available to manage
financial risks.Arvind Mills was the first Textile Company in India to implement ERP,
SAP as back as in the year 1997-98. The company follows best accounting practices to
prepare its financial statements as envisaged in the Indian and international accounting
standards.
UTILITIES
Arvind established its own Naphtha based combined cycle cogeneration plant in 1997.
The same has been converted into Natural Gas fuel. Being operated on Natural gas fuel
Arvind is serving the nation by preserving the precious resources with establishment of
highly efficient combined cycle cogeneration plant both at Naroda and Santej (main two
facilities). At the same time it is also serving the objective to provide stable, reliable,
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Achievements
1. By 1991 Arvind reached 1600 million meters of Denim per year and it was
2. Arvind mill look its place amongst the foremost textile units in the country.
4. Recently awarded as the “Reid and Taylor of the year 2007” by Asia retail congress.
5. Brand of the year Award 2007 (kids wear category) by Clothing manufacturer
association of India.
6. Pinnacle Award for Shoppers Stops for the best brand in the kids segment.
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ENRICHING LIFE STYLES
Styles may be short lived, but for well over seven decades Arvind Mill has been defining
and shaping many a collection and trendsetting styles across the ramps and retail
outlets of the fashion capitals of the world. Arvind mill is today synonymous with a vast
range of lifestyles products - be it fabrics or brands. Time and again we have been
called to produce some of the finest fabrics and exacting dresses for some of the
world's most quality conscious brands - while evolving our own extensive brand
portfolio.
Arvind mill is amongst a few organizations worldwide with a portfolio of brands that are
distinctive and relevant across diverse consumers. At Arvind, brands work across
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ARVIND BRAND
Arvind Brands, a subsidiary of Arvind Mills, is an important player in the Indian branded
apparel industry. With an array of international brands like Lee, Arrow, Tommy Hilfiger,
Wrangler and domestic brands like Newport, Flying Machine, Ruf n Tuf and Excalibur,
the company was present in most of the segments of the market. But the company was
facing severe competition from major brands like Louis Philippe, Park Avenue and small
brands like Trigger and Blackberrys. Also, with several MNC brands poised to enter the
Indian market, the company was under pressure. The case discusses the various
brands of Arvind Brands and its competitors and outlines in detail, the efforts made by
The case also throws light on the future of the branded apparel industry vis-à-vis Arvind
Brands.
Issues:
The issues concerning branding and brand management in the Indian apparel
industry.
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Arvind Brands’ Competitive Position in the Indian Branded Apparel Market
According to a study by KSA-Technopak, the two companies that have the greatest
potential (because of their presence in all the stages of the garment manufacturing
process) to benefit from the post-MFA trade scenario are Raymond and Arvind. Arvind
sourced its fabric from the parent company- Arvind Mills, which gave it advantages over
other players...
Growth Strategies
As of 2005, Arvind mill with its formidable set of brands was in a comfortable position.
Most of its brands had high recall value and enjoyed a fair share of loyalty. From the
perspective of its parent company, Arvind Mills, which produced 110 million meters of
denim every year, the garment division, i.e. Arvind was the future growth engine...
Outlook
Most analysts believed that the big brands owned by large textile houses like Arvind mil
due to this mindset, lacked fresh ideas and were unable to keep up with market trends.
According to Sahni, "The marketers of big brands were often not willing to experiment
and tap smaller towns and cities. They concentrated only on big cities by setting up
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large exclusive stores and were averse to the idea of placing their products in multi-
brand stores...
Arvind Mills Limited is the flagship company of Rs 20 bn (US$ 550 m) of the Lalbhai
Group. It enjoys the distinction of being the world’s largest exporter and Asia’s largest
producer of Denim. Various brands owned by Arvind include Flying Machine, Newport
and Ruf & Tuf in Jeans and Excalibur in shirts. Apart from these, the company has
licenses from reputed International brands like Arrow, Lee, Wrangler and Tommy
In the past, the company faced financial difficulties due to a downslide in denim markets
and heavy depreciation charges as new projects were commissioned at Santej. Also,
these projects were largely financed by high cost debt, which resulted in a huge interest
cost burden severely affecting its profitability. The same has been reflected in the FY00
and FY01 results (see table below). It underwent a restructuring exercise in FY02 which
was approved by a majority of the lenders and which saw the interest costs reduce by
nearly 50% in 1QFY02 itself. The company bounced back in FY03. It reported its
highest ever operating profit at Rs 4.3 bn, signifying a CAGR of 108% since FY00.
globally resulted in higher price realizations contributing 63% of the total revenue. Going
forward, Arvind Mills with its vertically integrated set-up is poised to capitalize on the
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immense opportunities available for export growth post the quota system and has
rupee albeit at a slower pace, volatile cotton prices and cyclical nature of denim which
has assumed the nature of a commodity are the downside factors to be considered.
BUSINESS UPDATE
The textile park project for outsourcing Shirting/Denim/Khaki’s fabric has begun
The Bangalore Jeans stitching and washing facility with an annual capacity of 4
The erection of 10 Million meters Denim fabric processing plant is complete. The
The activity for increasing the Knits garment capacity by 1 Million pieces per
TEXTILE EXPANSION
Textiles maker Arvind Ltd will spend about Rs200 crore in FY11 to raise textile capacity
in denims and shirting, a senior official said on Friday. “We would be adding about 10%
in capacity both in denim and shirting fabrics. Shirting would be slightly higher,” chief
financial officer Jayesh Shah told Reuters in an interview. The capex would be funded
mostly through internal accruals. Ahmadabad-based Arvind, the third largest maker of
denim globally, counts Levi Strauss, Gap Inc and VF Corp as clients. The firm is
expecting a growth of at least 15% in consolidated sales helped by a robust brand and
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retail business, Shah said. It had reported a consolidated revenue of Rs3, 280 crore for
the year ended 31 March, a 19% rise over the previous fiscal.
Cotton prices have risen about 10% since 21 May when India allowed exports of cotton
after a one-month halt. Cotton prices are up to 34% higher than those prevailing
previous year, prompting textile firms to increase product prices. “To the extent possible
every textile company is trying to pass on the cost push. Through the value chain… all
of us are going to take some hit in margins. I don’t think customers are going to pay
more,” Shah said. Arvind Mill had reported a consolidated net profit of about Rs500
million in FY10 compared with a net loss of Rs994 million a year ago. Shah expects
profits to continue growing this fiscal as higher sales and price increases partially offset
the impact of raw material costs. The firm is also planning to unlock value by developing
a part of its 1,000-acre land bank situated in and around the city of Ahmadabad. “We
are looking at how best to use this to realize the maximum value. One of the thought
process would be to develop some of it, to create higher valuation,” Shah said. Many
major textile firms are tapping into realty to diversify and grow its revenues. Bombay
Dyeing & Manufacturing, Century Textiles & Industries, Provogue India and Alok
Industries are some of the other firms intent on developing or selling valuable land
parcels to boost cash flow and cut debt. Shares in Arvind were trading down 0.78% at
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SUBSIDIARIES PERFORMANCE
Arvind Products Limited a 54% Subsidiary saw its turnover rise by 9% to Rs.96.23
Crores in the current quarter compared to Rs.88.66 Crores in the corresponding quarter
Previous financial year. The earnings of the company saw a substantial improvement
due to better performance of the Khakis product group. The losses for the quarter were
Contained at Rs.0.37 Crores in the current quarter compared to Rs.4.46 Crores in the
positive Earnings in the near future. The revenues for Arvind Brands Limited went up by
44% to Rs.100 Cores in the current Quarter compared to Rs.69 Crores in the
corresponding quarter previous financial year. The festive season saw all the brands
OUTLOOK
The company has been focusing over the years on reducing its dependence on denim
and has progressively grown in other product categories including shirting fabric, and
knit fabric. Expansion of garment facilities is also a part of the diversification and
profits of the company has increased over the years. However, denim continues to be
the mainstay of the company and the current glut in the market is likely to affect average
realization and profit margins in remaining two quarters of the year. Denim depicts
cyclicality and the company estimates that denim is currently in its down cycle
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internationally with increasing capacities and lower offtake.The company is better
equipped to handle the current expected downturn than it was in the past. This is mainly
from two factors: Product diversification as discussed earlier and the ability to produce.
denim at one of the lowest costs in the region. The outlook on denim is negative for both
volume as well as prices in the international market and positive for volumes in the
domestic market. The domestic market prices willbe under severe pressure due to large
capacities being added with domestic market in focus. The company has been
approaching the domestic market with lot of innovative strategy and is confident of
retaining its position as India’s premier denim supplier. The outlook on all other product
groups is very positive and they are expected to cushion. the fall in overall margins of
the company due to weaker denim demand. The supply side factors like cotton, power
At current low levels. The costs of dyes and chemicals have gone up substantially over
the Period of last year, but are expected to be stable at these levels in near future.
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ARVIND MILLS CHANGES NAME, FOCUS, STRATEGY
Textile major Arvind Mills which has been recently going through a bad patch owing to
transformation in a bid to become a billion dollar company. The company has firstly
changed its name from ‘Arvind Mills Ltd’ to ‘Arvind Ltd’ with a new logo and identity to
reflect a company which is diversified with focus on branded apparel and retail.
The promoters will increase their stake from 34% to 47% and infuse Rs.188 crore
capital into the company. Also, half of the Rs.1400 crore debts which Arvind Ltd has
would be repaid by selling off land at Ahmadabad and Bangalore thus positively
affecting the company’s profitability.Arvind is now giving more focus to brands and retail
which uptil now contributes 19% of total revenue. It will also move to become an
integrated textile player by producing fabric as well as retailing it. With a combination of
its own as well as licensed brands, Arvind aims to become the largest apparel brand in
India with focus on Tier II and III cities. The strategy may work out to be rewarding for
the company as it has a good portfolio of domestic and international, and has been a
established national player. The move also helps it to ward off any risk it faces from the
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ARVIND MILL UNVEILS 150 NEW PRODUCT
Arvind Mills Ltd (AML) has launched a new marketing initiative wherein it unveiled about
150 new products like Teflon coated fabric called Threads of Life. The fabric would be
available in the next six months. AML head of international sales and marketing Girish
Rao said that the company was targeting a 10 per cent growth this year as compared to
last year. The company reported a Rs 363 crore turnover last year. The fabric is
Hilfiger, GAP, JC Penny and others. Mr. Rao added that the Crosshatch range and
over-constructed fabric range just launched would lead the trend in the international
fashion market.
Arvind's expansion and diversification projects have suffered from substantial time and
cost overruns as well as stabilization problems, which have coincided with the ongoing
downturn in the denim industry. In 2000, Arvind Mills, once the darling of the bourses
was in deep trouble. Its share price was hovering between a 52 week high of Rs 20 and
low analysts no longer tracked the Arvind Mills scrip. As the denim business continued
to decline in the late 1990s and early 2000, Arvind Mills defaulted on interest payments
on every loan, debt burden kept on increasing. Of Rs 9 (in the mid 1990s, the share
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1. Arvind Mills was the flagship of the Lalbhai group. It had significant presence in
textiles, ready-to-wear apparel, agro-chemicals and dyestuffs. Arvind Mills had 5 denim
2. Fabric with velvet. It is closely woven and has a thick, short pile on one side.
3. A textile fabric with diagonal ribs (combination of plain and purl stitches, producing a
The company's credit rating had also come down. CRISIL downgraded it to "default" in
October 2000 from "highest safety" in 1997. In early 2001, Arvind Mills announced a
restructuring proposal to improve its financial health and reduce its debt burden. The
proposal was born out of several meetings and negotiations between the company and
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BEYOND BUSINESS
At Arvind, 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 because of these beliefs that Arvind is
always on the forefront of extending a helping hand for the needy, downtrodden and for
Arvind has always been actively involved in the educational institution, hospitals and
Indian Institute of Management, Ahmadabad (IIMA), and helped set up the Ahmadabad
Textile Industry Research Association (ATIRA), and The Kasturbhai Lalbhai Textile
Training Center to develop and enhance the skills of textile workers. The Narottambhai
Lalbhai Rural Development Fund and The Lalbhai Group Rural Development Fund
where founded to undertake special programs for the economically deprived. It also
assists the nearby villages, through nutritional programs, food camps and the
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SHARDA TRUST
At Arvind, we believe in repaying to society in our own little way through a social arm of
Established in 1995 with the support of Arvind Mills, “Strategic Help Alliance for Relief to
Distressed Areas” (SHARDA), its purpose is to help the urban poor in improving their
quality of life. The Trust has based its strategy on the premise that a family has five
basic needs, listed below and ranked according to their priority. These are:
Basic physical infrastructure for clean potable water at the door steps in
surroundings.
Primary health-care.
SHARDA Trust joined hands with the Ahmadabad Municipal Corporation to upgrade the
physical environment and living conditions in a slum pocket called “Sanjay Nagar.” The
completed the project within time and budget. So innovative was the Trust's approach,
that on 7 August 1998, the United Nations Centre for Human Settlement (UNCHS)
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included the Sanjay Nagar project in its "100 Best Practices Global List".
Subsequently, the Trust has taken several initiatives like providing secondary and
tertiary healthcare to the urban poor through networking with prominent hospitals in the
city. About eight hundred patients have benefited and approximately Rs.13 lakh have
The Trust collaborated with the National Institute of Fashion Technology (NIFT), Gandhi
agar, and helped the urban poor to train in the area of sewing machine operation. The
Trust also organized placement activity with the local garment manufacturers and has
Spoken English and basic mathematics for the youth belonging to poor families and
providing them with computer skills is the other activity that the Trust has undertaken in
collaboration with the Chandraprasad Desai Memorial Foundation. The Trust is poised
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CONCLUSION
A huge window of opportunity has opened up the Indian textile industry for various
players need to get act together. Government is playing the role of facilitator by taking
various majors. It’s now for players to make investments in building the capacities and
making them integrated manufacturers. The industry enjoys significant strength and
questionnaire, a fact has came into light that Arvind Mills is the most known and popular
Brand in context of major Textile giant followed by Reliance and Birla Group. Because
of applying innovative ideas such as providing various facilities, launching new schemes
& offers Arvind Mill’s garments are more used by people as compared to other one.
Except it, people firstly prefer for good quality and comparatively low prices Textile
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