Arvind moving towards becoming a fashion retail giant

Textile conglomerate Arvind has a lot on to focus on. Sanjay Lalbhai, its chairman and Managing Director is busy firming up plans to establish a 50 acre factory cum residential village in Dehgam near Ahmedabad on the lines of huge garment factory complexes in China. Meanwhile the company is focusing on strengthening its fashion retail business by bringing in global more brands to India. Another major plan agenda is growing its ecommerce initiative, Creyate.

Becoming major fashion retailer

The company’s textile factory in Santej has a group of 300 tribal women, trained and employed by the company, and put up at the residential quarters in Chhatral. The new factory in the making will provide wings to Lalbhai’s dream of transforming Arvind into a garment maker. The journey from being a textile manufacturer to a pure garment player would surely be a long one but the company is banking on garment business to drive growth. Arvind currently produces about 282 million metres of textiles, of which only 5 percent is utilised for garments.

But Lalbhai is not new to challenges since he has successfully transformed the company from being a maker of saris and dhotis to the world’s second largest denim producer. The company also suffered when he took up the challenge of restructuring of Rs 2,500 crores debt against sales of Rs 1,150 crores with a debt restructuring package of Rs 800 crores. When Arvind was on the verge of collapsing, things started looking up again. Today its debt-equity ratio stands at 1.14, down from 3.16 in 2001-02.

Keeping the current state of the industry in sight, the company is gradually moving towards becoming a leading brand and retail company. Arvind Lifestyle Brands, subsidiary of Arvind already has an impressive brand line-up comprising Tommy Hilfiger, US Polo Assn, Elle, Geoffrey Beene, Arrow, Calvin Klein and now Gap, Aeropostale and The Children’s Place.

Combating rivals in retail space

Arvind doesn’t want to stop at partnering popular global brands such as Gap, Calvin Klein, Tommy Hilfiger, Nautica and Aéropostale but moving a step ahead, it is also said to be eyeing an entry into the footwear and cosmetics segments. Kids’ wear foray has already happened with The Children’s Place. It already has other strong brands in kids’ wear like Tommy kids, Cherokee kids, US Polo kids and Nautica kids.

Arvind is said to be eyeing acquisition of Indian operations of cosmetics and beauty retailer Sephora, owned by French luxury conglomerate LVMH Moet Hennessy Louis Vuitton. Plans are afoot to venture into the Rs 30,000 crores unorganised Indian footwear market with its own footwear labels and other shoe brands for online retail. The company has roped in Rajiv Mehta from Puma India to spearhead its footwear vertical.

And the competition to grab a pie of the booming Indian ecommerce market toughens, Arvind Internet, the online arm from Arvind textiles aims to generate Rs 1,000 crores revenues over the next three years from its ecommerce business. The plan is to launch several online business models at a regular gap to establish steady presence in the competitive market.

For this fiscal year, the company projects growth estimate of 14-15 percent for its retail business with improvements in margins in the brands and retail segment. The company has been surely shifting focus towards brands and retail segment, whose contribution to topline increased from 22 percent in FY10 to 30 percent in FY15. It expects this to go to 35 percent in FY18.

Lalbhai is certain that despite strong competition from rivals like Madura Fashion & Lifestyle, the company would manage to race ahead with a strong portfolio of existing and new global brands it has brought to India.