“Most of our international competition for high value fashion products comes from Pakistani and Turkish denim mills.” Says Aamir Akhtar, CEO, Denims, Arvind Ltd. in an email exchange with Radhika Sachdev
Q. What’s the apparel business’s contribution to the Group turnover, and has it changed over the past five years?
Arvind forayed into Denim Garment Manufacturing in 2002. The entire apparel manufacturing business (including Jeanswear, Shirts, Knits, Innerwear, Suits & Blazers and technical Apparel), contribute approximately 14 per cent – 15 per cent of the total Group turnover. During the past five years, the group has focused on consolidation in each of these six apparel streams & have successfully built strong buyer relations and the image of a vertical solution provider. The next five years will see us quickly ramping up capacities across all these apparel categories.
Q. What are the main variants in denim you are working with? What’s the response to stretch?
Through its evolution from a work wear to fashion and lifestyle product, Denim is currently at stage where functionality and performance are becoming equally important as aesthetics. Stretch denim is critical to this aspect of the evolution. Almost 95 per cent of all our Denim fabric & garment products are stretch. The Goal Post remains shifting in terms of percentage of stretch-ability but in general, stretch denims are here to stay.
Q. What is the kind of innovation you are doing with your fabric?
Arvind is focusing on a good mix of both “Continuous – product extension” & “Disruptive – IP led” innovations. While we remain focused on delivering comprehensive product solutions for our strategic customer’s immediate business needs, we are also investing heavily in bringing path breaking changes in denim, as a product. Denim of the future will include a wider set of aesthetic and performance elements. Innovation in the field of sustainability – reduced environmental impact, will remain central to our entire vision on sustainability. Our garment business has been established for seamlessly translating the fabric innovation content, into finished garments.
Q. What’s your current production capacity vis-a-vis demand? Are you buying fabric from external vendors also to keep pace with the demand?
Our denim garment capacities are still small compared with our fabric capacities. Garment unit consumes approximately 10 per cent of the total denim fabric production. We intend to progressively scale this up to 70 per cent captive consumption over next five years.
Q. What’s the size of the domestic market, year on year (yoy) growth and who is your target customer?
Domestic market consumes approximately 700-750 million meters of denim fabric and is growing at approximately 13 per cent to 15 per cent, every year. We work very closely with all national brands, value retailers and 2nd tier brands in the country. We also maintain strong traditional relations with major denim distributors in India.
Q. How is women and kids segment picking up?
The Indian market is still primarily focused on men’s product. For us, 70% business is in men’s product. Women’s product is picking up but growth in demand is still slow. Kids business in India is still very price-sensitive and buyers mostly focus on very basis or core products.
Q. How is the denim market organised in price-sensitive India in terms of premium, mid-range and low-range? How is Arvind’s portfolio divided between these three segments?
Indian market is generally more price-sensitive but all major players are clearly able to define & appreciate value against cost. Arvind is perceived to be delivering a good value for money and has established a position as a solution provider in the mid & premium segments. Our ability to support Indian brands with innovation & sustainability content, as well as marketing / branding support helps build better value for all stake holders.
Q. How do you forecast trends for the Indian consumer?
We have built a strong team of in-house design resources, who closely collaborate with design teams of our partner brands to study and respond to their aesthetic signature and specific trend requirements. We have also employed the services of well-known international designers and laundry experts to provide design and trend services to strategic brands.
Q. Who are your top big competitors in the Indian market?
Almost all Indian mills are aggressively building product, service and sales capabilities. We are very excited and happy to see healthy competition in the Indian market. It motivates us to constantly innovate and differentiate.
Q. How are you facing the challenges posed by premium foreign brands?
As a denim fabric and garment supplier, we are a significant supplier to most international brands operating in India.
Q. How much are you exporting and to which countries? How is the export market growing?
We export approximately 50 per cent to 55 per cent of our total denim fabric production and approximately 85 per cent of our jeans garment production. Major buyers are in the USA & EU. The Western markets are generally stagnant or have de-grown by one to two per cent. There is ample headroom to replace basic – core business with value-added products from Arvind.
Q. Who do you compete with internationally, in the same price range?
Most of our International competition for high value fashion products comes from Pakistani and Turkish denim mills.
Q. Your denim sales in the last fiscal?
Our denim business sales for previous financial year were approximately Rs 2300 crore.