Apco Fabrics has set up a Rs 50-lakh design studio in Hyderabad to support its entry into the lucrative garments segment. Andhra Pradesh’s largest handloom cooperative plans to open four or five new stores in the city’s upscale areas, such as Banjara Hills, Jubilee Hills, Gachibowli and Hitec City – with an investment of Rs 10 lakh in each store – over the next one year.
“Our traditional customer base was middle- and lower middle-class, but they have found lower-priced and more attractive alternatives in the market. Our unique selling proposition is genuine handloom. This is an important asset when entering upscale markets. These customers have the purchasing power, they care for genuine handloom and also have a concern for handloom products — which works for us,” said I S Srinaresh, director of handlooms and textiles and managing director of Apco, describing the move as a “policy shift.”
The cooperative will launch its new product range – which includes kurta, kurtis, shirts and jeans – on September 30 as part of the National Handloom Expo, and will put it on sale at a showroom in Banjara Hills for Dussehra. These garments (except jeans) also form the main stock of city-based handloom store Daaram which, along with Fab India, will be Apco’s competition in the upmarket segment.
Apco held a sale on the Infosys campus in the city a few months ago. “The response was good but it brought home the limited nature of our product range. For the new products, we have identified 20-25 corporate houses in the city and will focus our marketing efforts on them,” Srinaresh pointed out.
In 2009-10, Apco’s revenue was Rs 250 crore, up 32 per cent from the previous year. Of this, Rs 125 crore (ie, 50 per cent) came from the livery segment, which is fabric used for uniforms of police and forest department staff as well as students. Yarn sales contributed Rs 68 crore (27 per cent) and the rest came from products such as sarees, bed linen and furnishings.
Though it has been making profits for the last five years, it has accumulated a loss of Rs 200 crore over the last 20 years.
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Srinaresh estimates the handloom market in the state at Rs 3,000 crore, of which the cooperative sector accounts for only some 40 per cent. Apco has 250,000 weavers as its suppliers and is mandated to function with the overall aim of providing livelihood security to them. Its wage and material costs are in the ratio of 40:60.
The average monthly income of weavers is varies from Rs 3,000 to Rs 8,000, depending on their skills and output. “For instance, the earnings of the weavers of Uppada sarees are at the higher end,” he said.
One of the main issues facing Apco, according to Srinaresh, is that a majority of its 400 sales staff are stuck with old mindsets and constantly need to be given a push. “Most of them will retire in the next two years. We have recruited 50 graduates of the Indian Institute of Handloom Technology, and will add 150 more in the near future.”
Another problem is lack of stable leadership at the top. In the last five years, Apco has had six managing directors, he noted.
Daaram threads its way to profits
Hyderabad-based handloom store Daaram, which means ‘thread’ in Telugu, started in 2007 with an initial investment of Rs 75 lakh, and broke even in 2009-10. It works as an interface between the market and its 500 weavers. Daaram is, now, looking to open its outlets in Bangalore and Chennai but wants to wait till the demand picks up. “We are planning a solo exhibition in various cities to get a sense of how people are reacting,” said store manager Latha Tummuru, a graduate of the National Institute of Design, Ahmedabad. A second store in Hyderabad is also on the cards. “The biggest challenge,” said Tummuru, “is innovation and inventory management. We have to keep our stocks ready, anticipating trends. The other challenge is working capital rotation. This is why many people are moving away from handloom.” Daaram spends 60 per cent on fabric, 20 per cent on overhead, and 10 per cent on marketing and advertising.