Small players enter with a bang

Reshma Krishnan

THOUGH stagnant for long, the readymade garments industry has seen some major changes in the last few years. This is visible in the success of enterprising small companies which see great potential in branded clothing and are deriving benefits from their small size. These players have moved ahead by leaps and bounds by catering to the changing perceptions of the Indian consumer. Most were launched between 1995 and 2000 and include Colour Plus, Indus League, TNG Casuals Free Look and Provogue. Collectively, they cater to a Rs 190-crore market.

Catering mainly to the men's segment, their approach has been to react to the changes in clothing perceptions and the market and take advantage of the changed scenario. The men's segment is divided into formals, semi-formals, and casuals. The big companies that have traditionally catered to the formals market are Madura Garments (Allen Solly, Van Heusen, Louis Philippe, and Peter England), Zodiac and the Park Avenue-Raymond venture.

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The tilt towards semi-formal clothing is being catered to by the industry newcomers. The rate of growth in the formal wear market has fallen from 15 per cent to 10 per cent. On the other hand, the semi-formals segment is growing at 25 per cent per annum. However, the industry perception is that this development is just a phase and is the direct result of the segment's late introduction into the Indian market.

The story is different in the casuals market. The industry believes that the transition is here to stay. The casuals market began to sprout roots post-liberalisation when companies such as Levi's and Benetton entered the Indian market and began wooing the Indian consumer.

Since then, Indian companies and exporters experienced in international fashions have realised this market's potential and tried to remedy the situation. The casual wear market is pegged at around Rs 600 crore and is said to be growing at a phenomenal 30 per cent per annum.

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The smaller companies have been successfully catering to a market where clothes are in fashion for periods as short as two months or a fortnight. Indus League, launched in 1999, already boasts a Rs 27-crore turnover. Similarly, other companies have done in a year or two what established brands like Park Avenue took ten years to achieve.

These upstarts are ringing the wake-up call for the big companies that were oblivious to the changes sweeping the industry. Though they are small fry, they are still capturing significant market shares and setting trends. They have even been creating markets. Consider the recent launch of T-shirts especially designed for winter by Rupa and Company. It has taken the proactive approach by creating a need and fulfilling it.

The major problem with the listed companies is that they have failed to innovate or keep their fingers on the market's pulse, despite access to international markets.

However, it would be unfair to say that the old companies have not scaled the value chain. Raymond has introduced its casual wear brand Parx, substantially expanding its brand portfolio. Meanwhile, the slowdown in the formals segment seems to have affected margins. This is reflected in the fall in operating profit margins. Raymond's margins fell from 19.29 per cent in 1998-99 to 16.47 per cent in 1999-2000 and Zodiac's from 14.91 per cent in 1998-99 to 12.27 per cent in 1999-2000.