The ongoing Corona pandemic has hit the Rs 440 crore cost cutting plan of textile firm, Arvind Ltd, as the company expects a sharp fall in the demand for its products and sagging sales in the first quarter of the current fiscal, say bankers. Both Lalbhai group companies, Arvind and Arvind Fashions however, are taking several steps including asset sale to cut costs and reduce debt in the current financial year.

The Ahmedabad-based Arvind Ltd had promised banks that it would reduce its fixed costs by around Rs 440 crore during FY21 by reducing salaries, cutting its IT budget, foreign travel and advertisements, and by selling its loss-making units.

Apart from cutting its capital expenditure, the Lalbhai group firm has also decided to take the debt moratorium on its outstanding loans and working capital limits. Bankers iexpect the company to go ahead with more asset sales to cut debt by Rs 400 crore in the coming months from it total debt of Rs 2,500 crore as on March this year. Its debt was Rs 2,950 crore as on March 2019. In the current year, the company plans to develop its land parcels near Ahmedabad and sell villas to customers. But with a slowdown expected in the real estate sector, the demand from customers may not pick up, bankers fear.

Separately, another Lalbhai group firm, Arvind Fashions sold 27 per cent stake in its subsidiary, Arvind Youth Brands, for Rs 260 crore to Flipkart. Arvind Youth Brands retails well-known denim brand, Flying Machine on the online retail platform. The firm is also raising Rs 400 crore via a rights issue this week.