Rentals are the primary overheads, which are still very high in prospective locations.
Visagar Group, headquartered in Mumbai-India, is a multi-dimensional group of companies having vested interest in diversified areas viz Textiles, Retail Chain, Finance, Media, Education, and Rest Estate Development.
Visagar Polytex Ltd is a 27 years young BSE listed Company, engaged in textile manufacturing, wholesale, retail & trading business. It manufactures and wholesales Hand-work Sarees.
Visagar Group also retails ethnic wear through Company owned 8 ‘VIVIDHA’ branded retail showrooms. The Company plans to roll out franchise showrooms soon all over the country especially North and West India. Apart from retail, Visagar Polytex manufactures Interlining material at Surat on contract manufacturing basis and also trades in a variety of synthetic fabrics and cotton cloth.
Mr Tilokchand Kothari, the CMD of the Visagar Group along with the other members of the board of directors and rest of the team are responsible for overall administration of the Company.
Mr Kothari has more than two decades of abundant experience in Textiles, Financial Services, and Textiles and Media. His vision, acute leadership and rich experience have helped steer the Company through the highly competitive environment.
Sharing more on the expansion plans, Mr Tilokchand Kothari in a colloquy with Ms Madhu Soni, Sr Editor & Correspondent- Face2Face, highlights market beats in global textile, apparel and retail arena.
Mr Kothari, let us begin the talk with your outlook on present state of textile and garment-retail industry all over the world.
Interest rates, government policies and incentives, exchange rates, raw material prices all affect ones competitiveness in the global market. Rising living costs have been a concern all over. The Textile industry in India, especially manufacturing, has grown multifold since introduction of Government sops like TUFS, etc. However, the industry has been considered as an underdog for over a decade, and has been outperformed by other upcoming sectors. Having said so, I maintain a bullish outlook for the sector.
So, in the backdrop of said set of happenings, how is ethnic-wear retail likely to shape up? What would be your description on current movements, market dynamics domestically and internationally and the future of the segment?
The demand for textiles will only grow, unless you are in the premium segment where your brand perception commands growth. Rising costs have been a little concern for the retail industry. Rentals are the primary overheads, which are still very high in prospective locations. However, we plan to enter the retail space in Tier 1 & 2 cities by next year. We plan to start a few flagship Company-owned showrooms before venturing into our revenue sharing model (Franchise).
Our current focus, however, is on manufacturing of ethnic wear and we are concentrating heavily on design (R&D) and marketing of our manufactured products to wholesalers and retailers across India. Retailing through our brand would be the next step, once we have established ourselves as regular trendsetters in production across the different categories of ethnic wear (Sarees and Lehengas). Manufacturing of Sarees and Lehengas has been largely done by the unorganized players and as with all the industries, the scope in manufacturing is vast and limitless, it only depends on how we fit in.
Well, then to fit in best, what formula for a brand recall in ethnic-wear works well here in India? What quotient pleases your consumers – fashion, price or quality?
The factors depend on the brand placement and the local perception. Our VIVIDHA brand is in the value segment. We believe that in our segment, the designs should keep on flowing in and out of the store at the perfect mix of fashion, price & quality; anything lying on the rack for long is unacceptable. The business model should reward commitment and performance from the franchisees and the sales workforce.
Polyester, Viscose or Cotton, all these, today, make up a complex scenario in the market for fabric makers in your line. What say?
Yes definitely they do. We concentrate on value additions to these fabrics by man or machine. Selection of a perfect combination is the key to selling. And yes, our business dynamics are complex: Choice of fabrics, colors and raw materials like threads/sequins/beads/stones coupled with a plethora of designing possibilities – They make our products ‘VIVIDHA’ in its truest sense!
Now, talking policy; an anti-dumping duty of up to US$ 4.82 per kg on Chinese viscose filament yarn shall continue until February 24, 2012, according to the Department of Revenue. Will this add to your woes any way, in particularly, as your group plans to set up Rs.100mn embroidery unit?
No, it wouldn’t. Lehengas, in general, are highly value-added with a variety of synthetic, semi-synthetic & natural fabrics used. We plan to create a niche in the Lehenga segment through our design & innovation which will definitely command premium. An increase in one of the fabric’s price is not going to affect our Embroidery business.
That’s good. These days, a range of foreign brands are seen invading, and even local contenders in your line are spreading across India. How soon is the move likely to saturate the market? Are such happenings to bring in the quest of survival in the sector?
Yes definitely there will be ‘survival of the fittest’ situation at some point in future. But an upcoming market offers better opportunities than steady or saturated market.
In the organized ethnic wear, there is ample of space and opportunities for us to explore and learn at present. Once that space becomes crowded, the key to success would be your products. For that, we are primarily concentrating on production & design.
Over the last 3 years, brands like Chhabra 555, Ashika have stepped up their resources on franchise marketing and are going great at it on a national scale. We already have an experience of running VIVIDHA retail showrooms, however, we feel the need to strengthen our production facilities even more and go only at the best opportunities available which would bring a sure shot win-win for us as well as franchisees.
To talk of the segment we are into, the Indian wedding industry is evergreen and will continue to bloom forever. Sarees and Lehengas form an integral part of the wedding scene. The Saree, as a category, clocked an impressive 8.8% annual growth in value terms between 1998 and 2006 to become a Rs 53,459-crore market in 2006, according to an ICRA report quoting statistics from the ministry of textiles. The humble Saree today accounts for more than one third of total consumption of apparel and household textiles in India (Economic Times, 2008). The Lehenga is premium bridal wear apparel having a never ending, vast potential across the country and the product also has a tremendous scope for specialization and innovation.
In organized retail too, ethnic wear retail beats big western retail brands in terms of Customer Footfalls and Sales Density (Sales per Square Foot per Month). Average Sales Density of organized ethnic wear stores is nearly twice that in western wear counterparts.
Once with proven resources and potential, we aim to be spread steadily across the length and breadth of the country over the next few years. We are open for franchise tie-ins and invite potential investors to join hands with us to become a leading force in the largely untapped segment.
To tap this segment, Visagar Group being also in the Financial-Corporate advisory business, considering present milieu, believes what to be wiser- a backward integration or a forward one?
With backward integration, we are preparing our business for the future. Organized retail of ethnic wear is still immature and we intend to go slow and steady for now in the retail business. Having said that, we are constantly updating ourselves with the dynamics of product mix, locations, etc which are quickly evolving.
To conclude the talk here as the last question in connection to your recent embroidery unit set up plan, can we request the rationale?
To benefit from the synergies between various business divisions dealing with the product and other related products. In general terms additional margins of upto 15% to 20% on the final sale price would be possible in our wholesale channel. With the unit, we plan to specialize in Lehenga – the evergreen wedding attire. Production of Lehengas was primarily by hand work. Though machine based manufacturing of Lehengas is relatively new, we have found ways of achieving innovation using latest technology with cost competitiveness, quality and production volumes in a better way than hand-based production.
The Company has consistently witnessed a robust growth rate of 30% to 40% in business sales in the last few years. The current market scenario for textiles is even better than the last year. Moreover, infusion of new capital and leveraging Company’s allied business divisions will help us maintain growth. The Company is already into selling Lehengas through its wholesale channel at Surat. We have tapped a good number of retail clients across the Country and have recognized the huge potential in the niche Lehenga segment. Additionally, the Company operates its own retail showrooms in Rajasthan which are expected to get an advantage as selling points of the Lehengas.