Interview with Mr Prahalad R Agarwala

Until the mid-sixties, I would say, the Hosiery Industry in India was rather a complacent one. A number of organized sectors and localized brands kept churning out mediocre products. The consumers were less than satisfied but had no option readily available. However, a dormant desire for better innerwear remained there through the years.

Finally, in 1968, we, along with my brothers- Mr G P Agarwala and Mr K B Agarwala decided to delve deep into the possibilities and prospects of creating a brand that would revolutionize the hosiery market with quality that does not only sell but excels, and thus, Binod Hosiery saw the light of day. We not only had a mission to produce the best but a vision to bring care and comfort to the fatigued consumer.

Rupa initially started manufacturing innerwear and casual wear in Tirupur and Kolkata. It expanded its product line to include female underwear. Buoyed by the success in the East, we decided to take the brand national in 1975.

While the available products were upgraded to be more consumers friendly, soon the Company in 1985 under the brand name of Rupa launched a new line of products.

Within a span of decade from the formation of the company, as a major step forward, the company came out with a public issue in the financial year 1995-96 to become a public limited company.

Rupa has emerged as the country’s largest manufacturer of hosiery and innerwear brand, cornering nearly 10% to 12% of the Rs 5000 crore branded hosiery market. Even the Limca Book of Records has been conferring the honor to Rupa & Co as the country’s largest manufacturer of knitted undergarments for the last six years.

Rupa has today evolved as an umbrella brand for the firm and it has launched an array of successful sub-brands like Macroman, Frontline, Softline, Footline, Jon, Thermocot, Skywings, Bumchums, Interlock and Ribline. We have just launched a premium sub-brand AirVest and planning another one called Embrace, as well as a separate sub brand in the kids segment, Imoogi.

The growth in the turnover of the company, from Rs 60 Crores as at March, 1997 to Rs 536 crore plus, in more than a decade has been phenomenal and has transpired of course by the dedicated efforts of our promoters, management and all associated team with the company. Company has set its eye on annual growth rate of above 20%.

During the past few years, there has been a significant rise in corporate interest towards the inner wear segment for various reasons. One of the reasons being the huge domestic market that today demands for better quality products and the growing export prospects.

Inner wear is becoming increasingly a fashion accessory. The future of the inner wear market looks hot and positive as more MNC’s are stepping into the arena with their unparalleled marketing strategies and their latest product range.

However, the undergarment sector in India, until recently was one of the few markets that did not witness the entry of multinationals. With globalization of the Indian economy, international innerwear giants have entered Indian markets. Thus, the market, with the entry of new brands is set for a buoyant trend.

In addition, the role of the media cannot be ignored. In a market like that of India, where competition is on the uptrend, the role of effective communication plays a vital role (apart from design innovations, quality and distribution) in making the brand a success.

The knitted garment sector (Hosiery) constitutes about 25% of the total production textile & garment industry that makes backbone of India’s economy. Hosiery items include a wide range of products though mainly concentrated on innerwear and casual wear.

Today there is a global market for knitwear products; however, most of this international market remains untapped by India. India has great potential to expand into the global knitwear market, as its products are competitive particularly from a price standpoint. India is the second largest producer of cotton. Hence, cotton garment exports will grow and develop in the coming times.

The industry is showing a positive trend over the past few years and the growth is exponential.

In the early days of the knitwear evolution, Ludhiana and Calcutta were the prime production centers. But today Tirupur which was at one time a small shanty township in south India has developed into a major production centre and accounts for nearly Rs. 11000 crores of knitwear exports. This amounts to nearly 40 per cent of India’s total knitwear outflow. Tirupur has developed into a legend because of historical reasons and an abundant availability to high quality cotton and skilled labor force. India has a competitive edge in the manufacturing of readymade garments including knitwear.

Hosiery industry in West Bengal also has a huge growth potential; latest technology of knitting and process is being installed day by day in the state. This industry mainly consists of small and medium enterprises (SMEs) and it plays a vital role in the economy of West Bengal in view of its decentralized nature, labor-intensive character, job creation capacity and the prospects for earning exchange through exports.

As our climate is tropical throughout the country, our consumption of cotton innerwear is very high.

When one talks of casual wear the first item that one thinks of is knitwear and that normally means of T-shirt would have been termed as a vest and would have been relegated into the underwear department.

Today, come summer and it is time for cotton knitwear and every year there is a seasonal spurt of T-shirt manufacturers who take advantage of the season in India and abroad. 65% of Indian population is young, below 35 years.

Since 1980 the knitwear market in India for the local and export sections has acquired a new and fashionable dimension. Initially a garment worn on the playgrounds- the T-shirt began to attain a certain amount of dignity as world and Indian designers looked at it with newfound respect. It is therefore not surprising to see cotton knitwear at informal functions or even in offices. Indian exports for knitwear are already quite phenomenal since India is able to provide reasonably priced fashion knits for the world markets.

The main items of export in knitwear are elegant men’s T-shirts, fancy ladies T-shirts with exquisite embroidery and sequined work, night shirts for ladies and men’s pyjamas sets and sportswear and jogging suit and boxer sets.

Global Industry Analysts (GIA) has released a comprehensive report on the global hosiery sector, which forecasts the market will reach US$20.3 billion by 2015.

The innerwear market in India is currently valued at Rs. 11600 crore in value terms. From these pie of Rs. 11600 crore 35% to 45% share is of organized market and rest belongs to unorganized market.

The women Lingerie comprises of Rs. 6960 crore. The Indian lingerie industry is poised for a great leap ahead due to the growing domestic demand coupled with huge export potential. There are more than 1000 Indian brands present, but only 200 are active nationwide. The remaining caters to markets in the vicinity of their manufacture.

The Last decade has witnessed inflow of many multinational brands in the Indian innerwear market. Many foreign companies have already set up or are in the process of setting up their manufacturing units in India in collaboration with local players. India’s vast resources, skilled work force and infrastructure attract a lot of foreign investment in the field of innerwear.

The hosiery industry is dealing with a number of problems such as raw material price hike, financing woes, power crunch and an increase in employees’ dearness allowance. Such issues are likely to halt the operations of the industry across the nation.

Yarn prices have grown up almost by 120% in past couple of months, but still demand has not been affected because it is innerwear and fashion wear category.

The cost of cotton yarn and fabrics, principal raw materials of Hosiery and readymade Garment industries witnessed escalation of 100% to 200% during the previous year. Very recently, Excise application on Branded Garments in recent Budget FY 2010-11 at rate 10.3 %, which is a constraint for SSI / mid sized companies, may inflate prices further.

In India, the inner wear market is segmented between the organized & unorganized sector. Innerwear ceased to remain a utility item in the ‘80s. However, with change in lifestyles and better buying power, consumers have become more selective and demanding, and this has resulted in branded wear gaining ground.

Branding is a conscious strategy to ward-off the growing competition from international and other domestic brands. We believe that roping in popular brand ambassadors will do a magic to boost the brand's visibility. Small wonder, Rupa's marketing budget has exceeded Rs 40 crore this year. In fact, it was one of the few brands in the 80s and 90s that roped in models for promotion of its products. Rupa is the pioneer in roping in celebrities for endorsing hosiery products. It helped in ensuring higher conversion rate at the point of sales.

In 1999, the company roped in Bollywood actor Govinda as brand ambassador for its Frontline range. We have also worked with Aishwarya Rai way back in 1990. Later, we worked with the likes of Celina Jaitley and Koena Mitra for our women innerwear lines. In 2007, we roped in Bollywood superstar Hrithik Roshan in 2007 as the brand ambassador of Macroman, a premium sub-brand under the Rupa's stable. In sequel, we hired Ronit Roy to endorse another sub-brand, Jon, and Rajpal Yadav for Frontline. After seeing huge return from Macroman, the company has extended its contract with Hrithik for another three years up to 2012.

The company is concentrating on brand promotion for ensuring growth in terms of turnover and market share. Pursuit for enhancement of volumes of both domestic and export sales is being vigorously followed. With rapidly changing scenario, the accent is not only on product quality but also on style and modernity.

We are seriously looking for growth options available in terms of organic and inorganic growth. There are some vital negotiations in the pipeline that are not possible to disclose at this juncture.

• Fulfilling its responsibility as a corporate citizen, the Rupa group has established the Sobhasaria Engineering College at Sikar in Rajasthan.

• Rupa is part of the Heritage Institute of Technology as well as The Heritage School and Sri Sri Academy in Kolkata, to meet the challenges created in the country owing to increased global competition and rapid technological changes.

• As part of its efforts to give back to society, Rupa is also closely associated with various hospitals, like the Shree Vishudhanand Hospital & Research Institute, Kolkata and Sankara Nethralaya (Eye Hospital), Kolkata.

• Rupa is sincerely committed to producing environmentally friendly clothes that minimize carbon footprint and help to make the planet a greener place. All Rupa products are made from superior and natural fibers that are grown in sustainable farming methods. Rupa ensures that the raw materials and production processes do not destroy the environment with harmful chemicals and conserve water, energy and natural resources.

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