Arvind Mills to debottleneck manufacturing facility

Arvind Mills Ltd is planning to debottleneck the current manufacturing facility to increase denim fabric capacity by over eight per cent by the third quarter of the current financial year.

The company plans to invest over Rs 10 crore to debottleneck its manufacturing facility to take the advantage of the robust demand of denim in the market, the company said.

"The increased capacity would substantially help in servicing key customers whom earlier we could not service completely on account of capacity constraint," Jayesh Shah, director and chief financial officer, Arvind Mills, said.

The current quarter marks the revival of denim. After decline in volumes for the last three quarters, denim volume has picked up in the current quarter and the plant is now running at full capacity.

"The demand side pressure on denim experienced by the company for the last three quarters has finally eased. Volumes have increased on account of some of the large garment operations shifting to Africa and Asia from North America and western Europe," said Shah.

The company has recently introduced over 35 new looms, apart from the existing 594 units and with improved internal efficiency, the company is at present utilising 100 per cent of its capacity of 100 million metres per annum.

The company, during the last three quarters, had started supplying fabric to markets that have appetite for large quantities at lower prices.

This strategy has allowed the company to partially mitigate the volume loss it suffered , but the margin on these volumes were lower than what the company derived from its traditional markets, the company said.

With demand for major brands picking up, the company has started reducing its exposure to the price-sensitive segments, which would help overall realisations and is likely to start showing benefits from the third quarter of the current year. The demand for high-value cotton shirting continues to be strong, the company said.

The product mix of high-value cotton shirting is constantly moving towards very fine quality and thus increasing the realisations.