Financial Restructuring
In the mid 1990s, Arvind Mills undertook a massive expansion of its denim capacity even though other cotton 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, Arvind Mills found it difficult to repay the loans, and thus the interest burden on the loans shot up. In the late 1990s, Arvind Mills ran into financial problems because of its debt burden, and it incurred huge losses in the late 1990s.
The company came up with a massive debt-restructuring plan for the long-term debts being taken up in February 2001. This complex financial restructuring exercise, which involved several domestic and international lenders, is considered to be the benchmark and a case study in India. The restructuring was overseen by Mr Jayesh Shah, CFO and advised on by a JP Morgan Hong Kong team, led by Mr Ahmad Ayaz.
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