Arvind became the world's third-largest denim maker — then couldn't service the debt

Arvind Mills, founded in Ahmedabad in 1931 with ₹165,000 in capital, grew into India's largest denim producer and the world's third-largest by 1998. The company supplied fabric to Levi's, Gap, and other global brands, and in the mid-1990s undertook a massive capacity expansion funded by loans from Indian and overseas financial institutions.

The bet was that global denim demand would keep growing. It did not. Consumer preferences shifted toward other cotton fabrics, and Arvind was left with expanded capacity, falling utilization, and a debt burden it could not service. The company also distracted itself with diversification into electronics and telecom — including Pyramid-branded televisions — that had nothing to do with its textile competence.

By the late 1990s, Arvind was in severe financial distress. In February 2001, it introduced a debt-restructuring plan overseen by CFO Jayesh Shah and advised by a JP Morgan Hong Kong team. The restructuring — one of India's earliest large-scale corporate workouts — became a benchmark case study. Arvind survived and eventually demerged its fashion brands (Flying Machine, Arrow, Tommy Hilfiger India) into a separate listed entity, Arvind Fashions, in 2018.