BIZ-FACE TO FACE!

LOT OF POWER BRANDS WILL COME FROM OUR STABLE IN A YEAR OR
TWO: KULIN LALBHAI

Textile major Arvind recently merged its retail arm with its
subsidiary holding brands. The
company also has aggressive plans for its multi brand store
chain ‘The Arvind Store'.
Kulin Lalbhai, executive director
and younger son of company's chairman and managing director Sanjay Lalbhai, speaks to
Raghavendra Kamath and Sharleen D'Souza about company's plans in brands and
strategy going forward.

What is the idea behind the merger of Arvind Retail with
Arvind Lifestyle Brands?
The two entities were two separate investment vehicles and we have merged the two for operational efficiencies. We don't
have any divestment plans in the short term.

The company said it wants to achieve Rs 5,000 crore in brands
in next five years? Don't you think it is very aggressive?

Not at all. If you look at the portfolio and markets we are in,
the growth strategy is well thought out. Brands such as
Arrow, US Polo and Tommy Hilfiger are already Rs 400 crore
brands, which are growing at 25 to 30%. We are growing quickly and we have lot of platforms to
grow.

You have got into different categories such as menswear,
kidswear and speciality retail and
launched half a dozen brands in the last one year. Don't you think
you are spreading too thin?

In the short term, as you rightly said, it is important to focus and we are not saying anything different. In our portfolio, we
have had brand additions but we
are focusing on how do we push towards larger and established
brands. So the strategy is clear as
to how do we build power brands. These are brands which
are more than Rs 300 crore revenue. Bottomline and topline will be very healthy. You will see
in the next year or two years, a lot of power brands coming from our stable. So while you are seeing brand additions and
market often gets anxious when it sees brands activity, we are are also working on a strategy to
build our existing brands strongly. On the long term, we
want to be leader in apparel brands, there is focus. We do not
want to do everything. There are
so many proposals we have rejected.

The return on capital (ROCE) in brands and retail segment is
between 10.4% to 11.4% which is less than your cost of capital.
Your comments..

Beauty of brands and retail business is that shifts in ROCE happen quickly as portfolio
moves towards large brands. You can expect very healthy uptick in ROCE in the next three years
because our strategy is like that.
In the last three years, with the changes in excise and difficulty
in consumption in India, the ROCE went down. We have
actually beaten the markets. As brands grow, operational
efficiencies will cick in.

Your rival Madura has half a dozen key brands and is focusing on building them. What is your take on that?

Again, everyone has different strategy. How we look at short
term versus long term is different from how they look at it. They
have certain view of the world in the future and we have different view. We are very confident that
our strategy will help us to attain leadership position overall, in the
next four to five years.

Source : Business Standards