Arvind 4

Abstract: The case provides an overview of the Arvind Mills expansion strategy, which resulted in the associations poor financial health in the youthful 1990s. In the mid 1990s, Arvind Mills undertook a huge expansion of its denim capacity in spite of the fact that other cotton plant fabrics were slowly replacing the demand for denim. The expansion plan was funded by loans from both Indian and overseas financial institutions. With the demand for denim slowing down, Arvind Mills found it difficult to repay the loans, and thence the absorb burden on the loans shot up. In the late 1990s, Arvind Mills ran into deep financial problems because of its debt burden. As a result, it incurred coarse losses in the late 1990s. The case also discusses in detail the Arvind Mills debt-restructuring plan for the long-term debts being taken up in February 2001. Introduction In the early 1990s, Arvind Mills initiated massive expansion of its denim capacity. By the late 1990s, Arvind Mills was the terce largest manufacturer of denim in the world, with a capacity of great hundred million metres. However, in the late 1990s, due to global as well as domestic overcapacity in denim and the toss in fashion to gabardine and corduroy, denim footings crashed and Arvind Mills was looker hard.

The expansion had been financed mostly by loans from domestic and overseas institutional lenders. 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. In 2000, the company had a total debt of Rs 27 billion, of which 9.29 billion was owed to overseas lenders. In 2000, Arvind Mills, once the darling of the bourses was in deep trouble. Its serving price was hovering between a 52 week towering of Rs 20 and low of Rs 9 (in the mid 1990s, the share price was closer to Rs 150). Leading financial analysts no longer bring in the Arvind Mills scrip. The companys credit rating had also sum up down. CRISIL... If you want to get a full essay, order it on our website: Ordercustompaper.com

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