Arvind’s denim volumes rose 34 per cent year-on-year to 17.5 million metres in the June quarter
Gujarat-based textile major Arvind is exploring leased and other asset-light manufacturing arrangements to expand denim production, with its existing facilities already operating at full capacity amid strong demand.
Arvind’s denim fabric volumes increased 34 per cent year-on-year to 17.5 million metres in the June quarter, the highest level in 16 quarters. The company expects demand to remain strong through the end of the year, with no immediate signs of a slowdown in volumes.
“We see a robust demand going forward. Till the end of the year, we do not see any pressure on volumes,” Punit Lalbhai, vice-chairman of Arvind, said.
Asset-Light Capacity Expansion
With its existing manufacturing assets operating at 100 per cent utilisation, Arvind is examining ways to add capacity without committing significant capital to new facilities.
The company is considering taking over non-functional manufacturing assets available in the market and operating them itself, including through leasing arrangements. While no major move has been made so far, management sees such options as a way to respond more quickly to the current demand cycle.
“Currently, not much has happened, but in the future we are exploring those options. It is a good demand cycle and we are trying our best to take advantage of it,” Lalbhai told investors on Thursday.
The strategy would allow Arvind to increase manufacturing capacity while limiting the capital intensity associated with setting up new plants.
Japanese Expertise To Strengthen Denim Portfolio
Alongside capacity expansion, Arvind is investing in product development and strengthening its proximity to international customers. The company has brought Japanese consultants and designers on board, with management indicating that their involvement has helped improve the premium positioning of its denim portfolio.
Arvind is also expanding its global design capabilities through hubs in the US and the UK. It is evaluating one or two additional locations in Europe to strengthen its design network and stay closer to customers in key markets.
The company expects these hubs to help it respond faster to changing product requirements and develop offerings suited to different markets. The network also provides greater flexibility in serving global customers from multiple manufacturing locations, including where country-of-origin requirements influence sourcing decisions.
Indian Denim Manufacturing Gains Traction
The stronger denim cycle is also translating into increased interest in Indian manufacturing capacity. Bengaluru-based Gokaldas Exports vice-chairman and managing director Sivaramakrishnan Ganapathi said the company had seen a rise in enquiries related to denim production in India.
“The denims are dominating the scene now, so there are a lot of denim inquiries and denim business coming to India,” Ganapathi said.
For Arvind, strong denim demand and full utilisation of its existing assets are prompting a shift towards more flexible capacity expansion. Leasing or operating underutilised manufacturing assets could enable the company to add capacity without the time and capital commitment associated with building new facilities.
At the same time, investments in Japanese design expertise and international design hubs are aimed at strengthening Arvind’s product offering and helping it move further towards higher-value denim products.
