Not so random a web, this

Having restructured itself, Ludhiana's Nahar group looks for retail brand opportunity.

Ludhiana's yarnmakers are thinking retail, and thinking big. And for that, they want a part of your mind. The effort is being led by the Oswal family that has been in the mills business since 1949.

Last year, the Ashok Oswal-led Oswal group entered the markets for readymade garments and lingerie with brands like AO's and Sensa "" projected to have 120 exclusive outlets in India by 2007.

This year, Ashok Oswal's cousin Jawahar Oswal, chairman of the Rs 2,300-crore Nahar group that has a winner of a consumer brand in Monte Carlo, is getting ready for action with a plan of 250 retail stores by 2008.

But Nahar's retail emphasis is on Cotton County, its mid-market menswear brand that is already available at some 65 franchise outlets (though mainly in the north).

This is a figure that Kamal Oswal, the group chairman's son and also vice-chairman and managing director of Nahar Industrial Enterprises (NIE), plans to take to 100 by the end of this year, expanding both westward and southward.

With trousers and shirts in the range of Rs 350-700 and Rs 250-600 apiece, respectively, Cotton County is for the budget-bound consumer working in smaller cities. In the shirts market, that puts it in contest with Peter England, Zod and Parx.

"We have deliberately kept our focus on Tier II and Tier III cities, says Kamal Oswal, "as that's where volumes business are, and these are the cities where aspiration levels are growing rapidly."

Nahar, which has been supplying fabric to the likes of GAP, Tommy Hilfiger, Timberland, Madura Garments and Raymond, claims a cost advantage in integrated manufacturing.

"We can save anything between 20-25 per cent on total costs, as 85 per cent of raw material (cotton yarn) is produced inhouse, besides spinning and garmenting," says Oswal.

In a recent restructuring move, the Nahar group folded three companies into a single entity, NIE (total sales: Rs 630 crore 2004-05).

"The outgo on taxes and transport cost and interest burden have come down substantially," boasts Oswal, hoping to double profit-before-tax from Rs 37 crore to Rs 72 crore in the year ending March 2006.

Another help: a new 53-MW cogeneration captive power plant that uses bio-mass as fuel (though the company, curiously, is making steel ingots to optimise use of the power; bulk sugar is NIE's other unrelated business).

In all, the group is to invest almost Rs 800 crore over the next few years. "Even while retail needs no specific investments, especially since we have a franchise model, we are investing substantially in our core business," says Oswal.

But would the retail thrust really continue to be such a low-investment affair?

As the apparel market globalises, margins are shifting slowly towards the part of the value chain that works on engaging the consumer; as the fashion world demonstrates, the big money in terms of realisation-per-unit is all in meeting the consumer's evolved needs.

Success here calls for a presence not just on shop shelves but in people's minds. No wonder NIE plans to sell a wider range of garments under Monte Carlo, a well-known winterwear brand.

The adspend: a shade over Rs 4 crore. That may be too low, but the brand does have good creative resources (remember last winter's "spider" campaign?).