Fashion Inc

Indian designers focus on balance sheets to leapfrog into the next league.

The big question fashion designers are struggling with these days has less to do with palettes and twirls and more to do with balance sheets. Slowly but very steadily, they have come to realise that they need to corporatise their work if they want to leapfrog into the next league.

Sumeet Nair of the FDCI speaks in defence of the industry with a counter question: "Why do you think that the fashion industry is not corporatising? It is."

Nair's claim is supported by examples. Fashion designer Tarun Tahiliani has invested in Microsoft's ERP (Enterprise Resource Planning) software. Fashion designer JJ Valaya has built a factory spread over 40,000 sq feet in Manesar near Gurgoan and has about 500 people working for him.

Fashion designer Ritu Kumar says: "Fashion is getting largely corporatised. It is no longer a cottage industry. Fashion is a corporate entity." Kumar only handles the design side of the company with her son Ambreesh as the CEO.

She says: "You can't grow by keeping a business a mom and pop show." Valaya too now concentrates only on the design and PR and the other functions have been handed out to "professionals".

At the moment, the size of the Indian fashion industry is estimated at around Rs 500 crore, spread over 100-odd designers.

Though the buzz of corporatisation has taken off in fashion circles, there are challenges that many see to achieving it.

Says Tahiliani: "It has been very difficult to corporatise as there is a skill shortage. India Inc is facing it too. We are looking for a CEO who is independent and can take decisions independently. Also given the nature of the beast that is fashion, it is more difficult to corporatise. But it has been done abroad and it will be done here as well."

Adds Valaya: "International fashion designers who are big companies right now, started small. Tell me, who starts big?"

A look at some of the big international fashion designers does validate Valaya's point. American fashion designer Ralph Lauren who grew up in the less than privileged neighbourhood started by selling neckties.

Fashion designer Calvin Klein too grew up in the same neighbourhood as Lauren and went on to create a multi-million dollar fashion empire. Italian shoe designer Salvatore Ferragamo started with a single store in the US before turning his company into a huge global luxury brand that is worth millions of euros.

Says fashion designer Ashish Soni, who has been showing successfully at the New York Fashion Week for the past few years, "I think most Indian fashion brands are still family held businesses. This model was followed in Italy 50 years ago. In fact, it was still the same till fairly recently."

The challenge of corporatisation in fashion isn't limited to shortage of capable people for the top job but also finding someone who can understand fashion both creatively as well as a business.

Says fashion designer Raghuvendra Rathore: "In fashion, you don't just need a CEO but someone who understands how to position a brand like fashion. What is unique about the Indian fashion business is its ability to respond to change quickly. Those fashion designers who have made a name for themselves have done it because they are creative visionaries and not just pattern makers."

Both Soni and Rathore contend that one key reason for the lack of corporatisation is that not enough funds have flown into the business of fashion. According to them, this is also hampering their ability to pay corporate salaries to potential executives.

Says Soni: "Indian companies are getting international brands into India but they don't see any future with Indian fashion. These companies don't share our vision."

Soni's cue about the entry of international brands is interesting as one of the biggest factors in the fashion market right now is the entry of global luxury brands.

Will the availability of international luxury brands threaten the Indian fashion industry, is a question being asked fervently. To explore this read the story tomorrow.