Madura Garments to boost parent Indian Rayon

As sun sets on quotas, apparels rise

Madura Garments, the Rs 400 crore garment arm of Indian Rayon, is being seen as one of the major growth drivers of the company. This division, according to industry estimates, is expected to contribute 30 per cent to Indian Rayon's operating profits by FY07 from the current 9 per cent.

Indian Rayon, part of the A V Birla Group, is a legacy player in the textile sector. It has reportedly refrained from committing any incremental capital and its focus on the textile chain is on the Ready to Wear (RTW) through Madura which is India's largest retailer of branded garments.

It contributes nearly 25 per cent to the revenues of Indian Rayon and is bullish on the prospects of RTW garments in India as there is a significant increase in consumerism which will ultimately benefit Madura.

According to industry analysts, Indian Rayon follows a three-pronged strategy "" expand the product breadth under its main brands, extend its retail reach through its own stores and concentrate on contract and branded exports.

In the recent past, Madura Garments aggressively expanded its product offerings to include semi-formals, suits, knits, women's wear and accessories and leather items.

"Over the next few months, we expect Madura to complete its wardrobe offerings to include innerwear and women's ethnic clothes, among others," the analyst noted.

Meanwhile, Madura Garments is understood to be stepping up its presence in its captive retail reach by expanding the number of its exclusive stores.

The company is targetting to get 40 per cent of its revenues from its exclusive stores from the current 20 per cent. "We understand that nearly 50,000 sq feet of retail space have been already tied up to its existing base of 2,00,000 sq feet," the analyst noted.

Commenting on the exports front, the analyst said: "The Indian Rayon management continues to see the dismantling of quota under WTO as both an opportunity and threat. Strategically, it has no intention of pursuing any high-volume, low margin export opportunities and prefers to export to high-value retailers. This strategy is also a good way to keep a tab on evolving fashion trends and technologies."

Contract exports currently account for 17 per cent of Indian Rayon's garment revenues.

Indian Rayon, for the fiscal 2003-04 reported a net profit of Rs 131.7 crore on total sales of Rs 1,573.8 crore.