After manufacturing, selling fashion concepts and supplying material to global fashion brands like Tommy Hilfiger, Gap, USPA and several others, Arvind Ltd is keen to grow its own brand under the Arvind umbrella from the current Rs 4 billion to 10 billion in the next 4-5 years.
The key growth driver, according to Susheel Kaul, the company’s CEO of Lifestyle fabrics for the knits and wovens division, will come in from fabrics as well as the ready to wear segment which it came up with just a couple of months back.
“The mother brand Arvind should be chalking the strategy of the company as far as own brand revenues are concerned”, Kaul said.
The textile division, which makes up for denims, knits & wovens and women’s-wear, accounts for Rs 60 billion of revenue, contributing nearly 55 per cent of the group’s consolidated turnover. Revenue from the textile division is expected to touch 100 billion Rupees in the next 4-5 years.
“The mother-brand Arvind, under which ready-to-wear and fabrics have been rolled out, will play a crucial role in this endeavour”, he added.
The company has earmarked a Rs 15 billion investment over the next couple of years involving setting up of new mills, advertising & branding expenses and others. The investment will be borne by the company itself from its daily cash flow.
It is currently in talks with the state governments in Andhra Pradesh, Gujarat and others for incentives to set up manufacturing units.
The second component which will boost its revenues from the textile division is over increasing the use of “own fabric” particularly for the export market in USA, Europe and Far East, which will directly boost its margins.
Under the current scenario, global brands like Gap, CK, Nautica and several others procure the clothing material from Arvind Ltd and send it to third-party contract manufacturers in India, Bangladesh, Vietnam and other locations.
However, Kaul is in talks with some of the global brands who have expressed interest to procure the finished product directly from Arvind Ltd instead of routing the fabric to other manufacturing units elsewhere.
“The target is to increase own use of fabric from the present 10 per cent to 40-50 per cent in the next 4-5 years”, the official added.
Own use of fabric refers to Arvind Ltd rolling out the finished product for fashion brands from its own mills rather than just supply the material to its clients.
It currently rolls out 300 million metres of cloth from its mills of which only 10 per cent find usage as “own fabric”.
Kaul reasoned that it will directly help these global brands to cut on logistics cost and time as well as keep its products relevant to the ongoing fashion trends globally.
An official explained that in case global brands resort to their existing model, by the time a shipment hits the global stores, the fashion is no longer in vogue and thus the product loses its relevance as per market needs.
This business-to-business vertical accounts for Rs 26 billion of the total turnover and another Rs 40 billion is generated by its retail division which retails third-party branded garments in India.
In India, its fabric is available across 10,000 touchpoints and over 200 exclusive stores.