Arvind Mills chairman to bow out

mumbai: in a rare instance in the corporate history, the 80-plus lenders to arvind mills have decided to appoint the chairman of the company, paving the way for arvind lalbhai to step down. the move comes as a result of the lenders demanding that the company be run by a professional board. arvind lalbhai, the uncle of the present md sanjay lalbhai, has been at the helm of affairs for more than ten years.according to an agreement reached between the 80-plus lenders and the company, the lenders will influence the appointment of eight out of the 12 directors on the board. the lenders will also decide on four directors, including the chairman and finance directors. the lenders will select the chairman and directors from a panel of three suggested by the company. without commenting on the development, arvind mills md sanjay lalbhai said the board will comprise of four independent directors, four directors nominated by lenders. the remaining four will be nominated by the promoters. he said the company will be managed by a professional board and the ownership and management of the company will be separated. however, he (sanjay lalbhai) will continue as the md after the restructuring. on the threat of a takeover of arvind mills where the lalbhai group holds a 21 per cent stake, sanjay lalbhai said, ``our stake will increase once we subscribe to the unsubscribed portion of the rights issue.'' arvind mills has decided to mobilise rs 75 crore through a rights issue. the decision has been taken as part of the financial restructuring undertaken by the company to retire its high-cost debt and bring down the debt equity ratio to 1.2:1 from the present 2.5:1. the restructuring will reduce the annual interest outgo by half to rs 180 crore from the present rs 350 crore. the company has restructured its rs 2,700 crore outstanding debt including the floating rate notes (frn). sanjay lalbhai said that financial restructuring coupled with the 8-10 per cent growth in the denim market, the company will improve its bottomline. but the picture will turn more rosy after the quantitative restrictions are removed in 2005 under wto. arvind mills reported a loss of rs 383 crore for 12 months ended march 2001.