Provogue plans to set up 40 studios

Garment manufacturer and marketer Provogue India plans to add 40 new Provogue studios, each occupying an average area of 1,100 square feet.

The retailer will also add 21 megastores of 5,000 square feet each. The company has 41 branded stores in 19 cities. It also markets products through national chain stores and multi-brand outlets such as Shoppers' Stop and Pantaloons.

The company will fund the expansion using proceeds of its initial public offer, slated to hit the market this week.

"Margins from our own stores are significantly higher than from other channels. With additional stores our own store contribution will grow leading to improvement in gross margins," said Nikhil Chaturvedi, managing director.

Tim Eynon, director, said the company was not targeting the high end of the market, but the "emerging new middle India".

Chaturvedi said the development of new stores means a diverse set of channels that minimise distribution risk. Besides the metros, the additional stores will be located even in smaller cities such as Agra, Ludhiana, Lucknow and Mangalore.

The company also plans to enter into new product lines such as shoes, jackets and womens' wear.

While it is open to outsourcing these new products, it will also consider licensing agreements with existing players, Chaturvedi said.

Provogue India will increase the manufacturing capacity of its Daman plant from 2,000 shirts per day to 3,000. The company, which has thus far been outsourcing trousers, will now set up a trouser making unit with a capacity of 1,000 trousers per day.

The domestic apparel market is estimated at Rs 78,000 crore, growing at 13 per cent annually in value terms. The branded ready-to-wear segment in organised retail alone is growing at 25 per cent annually.