`We want to occupy as much of textiles as possible' -- Mr Nabankur Gupta, Group President, Raymonds

Reshma Krishnan

Raymond is one of the brand leaders in the readymade garment industry. It has been around for a long time but is now facing more competition than ever before.

Mr Nabankur Gupta, Group president, Raymond Limited, and Mr Pradeep Bhandari, President (Finance), spoke to Business Line on various issues concerning this sector.

Excerpts from the interview:

What do you make of the industry and the boom in readymade garments?

In very simple terms, clothes come from a raw material called fabric. Raymond makes fabrics and readymades. So, we are in both businesses. The brands you refer to are new entries, very small in size and if you look at the whole canvas, I dare say that it is a small industry. Therefore, to know whether this is hype you have to ask two questions: How much have they grown in a period of time? And, what is their absolute figure in terms of turnover? These brands are in the range of Rs 15-40 crore. Our readymade business deals with around Rs 200 crore and about Rs 70 crore in casual wear, that is the size, compared to the brands you are talking about.

Are you looking at expanding your readymade garments portfolio on the back of this huge boom?

We, as the biggest and the foremost player, would like to occupy as much of the textiles chunk as we can, be it in readymades or fabrics. Readymades are growing faster than the rate at which people are buying and tailoring clothes and, therefore, we will not hold ourselves back. So we will also focus all our attention on that. And yes, we are looking at expanding our portfolio very seriously.

Will the fabric industry become obsolete in few years? I am referring to fabric becoming a commodity and, therefore, suffering the fate of gold or coffee?

You are right in that sense in two ways. That fabric, through the tailor route, would be more into value addition because that will become a very large niche of people who would like to get their clothes stitched. This will follow the trend abroad where custom-made clothes are very fashionable. But that is not the scene today. As the width of conversion is limited and the cost of tailoring pretty reasonable in places other than metros.

Mr Pradeep Bhandari: Pricing also plays an important role. Tailored clothes are cheaper than factory-made garments. You take any category from shirts, trousers, and even salwar kameezes. So long as that price differentiation exists, the fabric will survive. There is also variety. You go to a fabric shop, you have the choice of a few hundred designs, which a garment manufacturer can never provide. It is different abroad, as tailoring there is expensive. If it were more affordable, surely people would prefer clothes tailored to size.

The shift to readymade garments, as a matter of convenience, will take place, but not as soon as everybody expects it too. And a policy change is not going to speed the process. De-regularising the industry from the small-scale will not lead to a wide scale shift.

What about the WTO agreement and the possible influx from fabrics through imports?

Raymonds is in the woollen blend suiting business, we have a 45 per cent market share, we are the third largest in the world in the integrated manufacture of woollens. We have proved ourselves in the international market; our fabrics are used for brands such as DKNY, Ralph Lauren and Armani. We provide value for money. If the imported fabrics you are talking about comes in, the lower-end customer will benefit. But our fabric does not cater to that customer. Our fabric is in the mid-upper end segment. It is, therefore, the powerloom sector that will be affected. The customer will be able to differentiate that Raymond is superior to Chinese imports, just by feeling the fabric's texture. But the powerloom will not be able to provide that differentiation.

What do you think of the fact that formals are being replaced by semi-formals and casuals and that the rate of growth in the formal market is falling?

This is cyclical. We cater to a market that is not going to change overnight. A few bankers deciding to dress down does not make such a difference to our market. We are selling more trousers than last year. We have a large growth in formal wear.

Pradeep Bhandari: One must look at the base of formal wear in this country. How many garment manufacturers are there in formal wear? If the base is low then the market will expand. If it is a large market, then a shift will make a lot of difference. The base is not there. If one has to buy a suit, the consumer does not have a huge basic market to choose from. There is the dressing down in fashion but much of it is hype.

Consequent to your restructuring, a significant part of your focus is now on textiles. Is it not right to say that the textile industry is in bad shape?

A significant part of our business is in textiles -- readymades, fabrics -- the whole plethora of textiles. The textile industry has grown in the last year, not by leaps and bounds...by about three per cent.

Pradeep Bhandari: Surely with the shift in demand from denim to cotton, all denim companies were affected. Some of these companies might have operating problems, you have to look at both these factors. Some companies might have financial problems. But, in general, the small-scale industry is facing a problem and the future does not seem bright because of the policies we have in power. It is not a cost-competitive industry. Small scale has been kept alive by fiscal benefits and subsidies. We have created a set-up that is not cost-competitive. Therefore, when the supports are withdrawn, they have to really compete with others. There will be problems in certain segments of the small-scale sector.

Do you think the future is in retailing and how do you expect to harness the potential?

The future is in distribution. And retailing is a very big part of it. So, we need to see where we are. We need to occupy a bigger space than we are occupying today. With a much stronger position in readymades than what we have today. We are looking at extensions in the product lines...also of brand. We are going very far in distribution, rewriting the whole retail network and at the same time, supply-chain management will become a critical factor for us. We are looking at enterprise resource planning platform, which will give us an edge over others in the industry.