Business Standard

More than a good yarn

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Sangeeta Singh New Delhi
Two years after the split of the Ludhiana-based yarn major Oswal Group, Ashok Oswal is moving out of his elder brother's shadow. Oswal, the younger brother of yarn pasha S P Oswal, has made a new beginning by foraying into retail, weaving and readymade garments.
 
It's easy to see why he beams with newfound confidence as he talks incessantly about his new businesses and the involvement of his elder son, Adish Oswal, on the retail front.
 
Now heading the Rs 250 crore Oswal Group (S P Oswal heads the Vardhman group, comprising Vardhman Spinning & General Mills, Mahavir Spinning Mills and Vardhman Acrylics), Ashok Oswal has entered the high-end lingerie market through the retail route. Managed by the group company Amran Trading, and sold through exclusive stores called Sensa, this multi-brand intimatewear (as the Oswals like to call it) is already being sold through four stores in the NCR and one in Bangalore. The group plans to have 30 Sensa stores by the end of the year.
 
How exactly are these stores different from other lingerie shops? "Firstly, Sensa is a one-stop store which houses all leading brands including Enamour, Vanity Fair, Lovable and Juliet. Secondly, it offers total privacy to customers to try on various makes and also get free counselling on how to choose the right size, which many ladies are not aware of," says Adish Oswal, managing director, Amran Trading.
 
He claims that Sensa is addressing the four F factors "" fun, fantasy, functionality and fashion "" associated with lingerie, adding that the stores, managed by saleswomen, give total comfort to buyers.
 
These saleswomen have received training from leading lingerie makers including those from Victoria's Secret. Besides, the stores house accessories and special-purpose innerwear like those needed for nursing.
 
Oswal's other initiatives in retail include ready-to-wear high-end casualwear under the brand AO's. With five AO's stores already in the NCR and Ludhiana, Amkryon International, the group company managing these stores, plans to have 20-25 such stores across India by the end of the year.
 
Again, Adish Oswal says these stores are addressing upmarket, fashion-conscious teenagers who value money. Prices will range between Rs 300-600.
 
These T- shirts will also have unique prints on them, for instance of music bands, wildlife photographs and so on, which are eye-catching for the younger generation.
 
By 2007, with an investment of Rs 30 crore, the Oswal Group plans to have 120 Sensa and AO's stores across the country. In the current year the company plans to invest Rs 10 crore. And Ashok Oswal claims banks are forthcoming in extending credit for the retail business.
 
So is this a derisking strategy? "Certainly not, our yarn business is fetching us decent margins but we studied the intimatewear industry closely and found there was huge untapped potential," he justifies. He may have a point "" according to a KSA Technopak survey, the lingerie market has the potential to grow by almost 70 per cent by 2009.
 
To further strengthen its position and in a bid to integrate vertically, the Oswal Group is also looking at getting into the weaving business with an investment outlay of Rs 120 crore.
 
For this, the Oswals are moving out of northern India to set up a weaving unit in Maharashtra. The company also seems to have zeroed in on a joint venture with a UK-based partner but Ashok Oswal does not want to reveal details now.
 
"Mostly focussing on weaving for shirting, this unit is strategically placed in Maharashtra because of its locational advantage "" given the fact that both the cotton fields and port facilities are there," he says. Oswal expects his younger son Abhinav, who is currently studying in the US, to oversee this business once he comes back.
 
However, he discards the speculation that the group is neglecting its mainstream business in the process. "We are spending Rs 50 crore to expand the spinning capacity at various plants. The Bhatinda plant is adding 25,000 spindles to reach 1,07,000 spindles and the Ludhiana facility with 33,000 spindles is slotted for expansion again," he adds. Oswal also hopes to close the current financial year with sales of Rs 300 crore.
 
With retail companies for clothes and innerwear mushrooming all over the country, are Ashok Oswal's projections far-fetched? Rivals feel that since Oswal is presently cash rich, getting into ventures which have low investment requirements like retail is not risky.
 
"Whether the model is good or bad will depend on how well it is executed. If every Sensa and AO's store has revenues of over Rs 10 lakh a month and manages growth of 10-12 per cent, the model will work," says a rival in Oswal's core business, yarn.
 
He also adds that sometimes retail companies make good business only after selling off the brands, which is not bad either. "What needs to be watched carefully is the weaving business where the Oswals are making an investment of Rs 120 crore," he adds.
 
He can be sure that the Oswals are watching it intimately.

 
 

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First Published: Aug 27 2005 | 12:00 AM IST

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