It was a risky move, but Lalbhai was onto something. Once the working man’s uniform, jeans had transformed into a fashion staple over the previous decade. When Audrey Hepburn, as Holly Golightly, crooned Moon River in denim pedal pushers and a terry cloth turban in the 1962 classic Breakfast at Tiffany’s, she sparked not only a fashion revolution—she helped ignite an economic phenomenon. By the 1980s, denim had become a symbol of youth and minimalist style.
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Lalbhai recognized the potential for India, a country with a rich textile history but hampered by outdated machinery and processes, to make a mark in the global denim market.
In 1985, he launched Renovision, a strategic plan to put Arvind on the global map of denim manufacturing. It was a monumental gamble, one that would eventually consume the company, but it was in tune with an India on the cusp of economic liberalization. With global demand for denim soaring, Arvind’s focus on serving international markets proved to be a prescient move.
In 1986, Lalbhai established Arvind’s—and India’s—first denim manufacturing plant on Naroda Road in Ahmedabad. A charismatic leader, he assembled a top-tier team from some of India’s leading companies, including Hindustan Unilever, enticing them to sleepy Ahmedabad with the promise of being part of an industrial revolution.
Riding the denim wave
Arvind’s plants were global in scale and world-class in quality. It wasn’t long before international brands like VF Corp. USA and Cluett Peabody & Co came knocking, seeking manufacturing and marketing tie-ups. By the mid-1990s, with a production capacity of 120 million metres, Arvind had become the world’s third-largest denim manufacturer, trailing only American giants Cone and Burlington.
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But Lalbhai wasn’t content to stop there. He planned an even larger expansion, aiming to make Arvind the undisputed leader in denim.
Then, the harsh realities of economics took hold. Arvind’s ambitious expansion coincided with a glut of capacity in the domestic market, where new players like Raymonds, Mafatlal-Burlington, and Century Textiles had entered the fray. The situation was further compounded by a global oversupply, driven by cheap Chinese exports and the devaluation of Southeast Asian currencies following the 1997 financial crisis, which eroded Arvind’s competitiveness.
As fashion trends shifted, denim prices plummeted. For a time, Arvind dismissed the threat from China, believing its superior manufacturing standards and product quality would prevail. After all, Arvind supplied some of the world’s top brands, and quality, they assumed, would trump cost.
Unfortunately, consumers didn’t care where the denim for their jeans came from, as long as the label read Levi’s, Calvin Klein, or Gloria Vanderbilt.
The decline in denim demand coincided with a slowdown in key export markets, particularly the US, where consumers were gravitating towards chinos, gabardine, and other casual fabrics.
Arvind’s aggressive expansion had been funded by substantial loans from both domestic and international lenders. As demand dwindled, these debts became unmanageable, leading to defaults. The final blow came in October 2000 when rating agency Crisil downgraded Arvind to default status, a stark fall from its top-tier rating just three years earlier.
With its debt-equity ratio soaring to an unsustainable 7.7 by September 2001, Arvind announced a restructuring plan aimed at reducing its debt burden and stabilizing its finances. By this time, the share price of the once blue-chip company had plummeted below ₹10.
Arvind eventually recovered after 2000 through a four-pronged strategy: diversifying its business portfolio, developing a strong business-to-consumer (B2C) model, and increasing its domestic revenue share. The revival was also aided by a resurgence in the global denim cycle around 2005.
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Yet, Sanjay Lalbhai’s grand vision of restoring India’s legacy as the world’s textile supplier, through his denim dream, had come to an end.