A five-pocket jeans is not going to work for a villager.Companies need to modify the product, not just ape the Western world. We needto have a connect with the consumer. You cannot just cater to thetrouser-wearing women


Sanjay Shrenik Lalbhai, the 55-year-old chairman andmanaging director of Arvind, wore a denim trouser for his company's 79thAGM on Friday. It was a conscious decision, meant to carry a message: "Denimdoesn't mean just jeans. Fabric cannot be associated with a form," saysthe man who joined the family textile business back in 1985 and made it theworld's fifth largest denim producer.


In an exclusive interview with ET, he said the Rs. 2, 700-crorefirm will soon launch denim salwar-kameez and, maybe sarees, as it bets on thedomestic market to beat the global blues. Excerpts:


We have a huge domestic market. Yet, 100,000 unitsclosed down and a million jobs were lost during the year-and-half globalrecession. Why?


India's textile exports stand at $24 billion. When demand in the exportmarket was falling 20%, the $35-billion domestic market growing at 4-5% couldnot compensate for the drop in exports. As a result, units in clusters likeTirupur had to operate at 40-50% capacities, and finally retrench.


With a revival in demand from the US & Europeahead of Christmas, do you see a recovery in the Indian textiles sector?


USjob losses to the tune of 10% hit the apparel sector the most, as impulsebuying came to a halt. All big brands saw sales shrinking, as apparels are thefirst to go off the buying list. Now, with the stimulus package showingresults, there is confidence in the economy. Apparel sales are picking up, butfor the momentum to come in a big way, US consumers need to get back thefeel-good factor. This we expect to happen around the second quarter of nextyear.


What could be an alternative export market for India?


Japan. It is a big market. Almost all Japanese companies have moved into China in joint ventures. Close to 80% of what they buy comes from China. But now, they have seen a cost escalation. So, they have now started coming to India.


Union textiles minister Dayanidhi Maran recentlysaid, "Manufacture and make money in India". Do you see thathappening?


Absolutely. We are a large population, next to China. If you take Chinese industry, it is booming. Although, its export component is huge($220 billion), the growth is now coming from domestic consumption. In India, we need to sit with the government and figure out how can we spur domesticconsumption and move more goods to the organised sector from the unorganisedsector.


Our domestic market is huge at close to $35 billion. Inthis, the organised sector is just 7%. The organised sector is not coming upbecause it doesn't have the delivery mechanism and flexibility. The unorganisedsector is fast, flexible, can give more options, but lacks quality and cannotoffer the right ambience.


So, if you can have the ambience of an organised sector, yetnot lose out on cost, that will change the game. We need to have a soliddistribution mechanism and provide world-class products at affordable prices.


What is stopping you from achieving that?


In India, there are a few issues. We do not have properdistribution and infrastructure. If you want to bring down your distributioncosts, you need to set up malls at the outskirts and not in the heart of thecity. Only then will the rentals come down from the levels that are among thehighest in the world as is the case in our major metros. Infrastructure has todevelop, the real estate has to become more reasonable, land reforms need tohappen. We need urban planning. So it's about policy framework also.

Coming to your favourite subject, denims, do youthink the denim revolution is yet to happen in India?


Denimsstarted in India in 1986 when we (Arvind) brought it. It is still an urbanphenomenon. If the US is a one-billion meter market, we are just 300 millionmeter-strong in India despite having four-times more people than in the US. Denims should grow close to 30-40% in India. Denim as a lifestyle will soon becomeacceptable to every Indian. Why wouldn't villagers wear it?

How do you plan to expand your market?


A five-pocket jeans is not going to work for a villager. Companies need to modify the product, not just ape the Western world. Why not have a salwar suits and sarees made out of denims? We need to have a connect with the consumer. You cannot just cater to the trouser-wearing women.


So far, Indian companies have associated the fabric with a form. Denim is not just about jeans. That's a Western phenomenon. But we are in India. We can have a bandhani saree in denim and a patan patola in denim. We (Arvind) have made a ready-to-wear saree for young girls who are not able to wear a saree properly. We have not test-marketed the product yet as we are keen on a denim salwaar-kameez first.


Indians love colours. We have to come out with newer products to grow the market. We are just launching a ready-to-wear pleated trouser. The product will be targeted at those who are not comfortable with jeans, but won't mind a trouser form.


By: ET Bureau


Originally published in "The Economic Times" dated September 29, 2009