Aarvee Denims and Exports Ltd is a leading global player in the textiles industry. Backed by experienced promoters, the company is spreading its wings all over the globe at a very fast pace. Established in 1988 by the Arora & VB Group, which has been involved in textile trade for over 50 years, well-qualified human resources and state of the art production units have made ADEL one of the world's largest vertically integrated denim manufacturers. Pankil Shah, Vice-President (Garment Division) shares with fibre2fashion the company's scheme of things in a retailing landscape that has radically changed in recent years.
The battle-cry today is 'Make in India'. How do you see yourself responding to this challenge? As a leading denim manufacturer/exporter, how are you positioning yourself to respond to this call?
Pankil Shah: A call to prove to this world the potential within India, brand “India” has the opportunity to prove its characteristics of reliability & trustworthiness, quality, durability, etc. This is an excellent cry by the leader of our country. It is a motivation for us to cry even louder, work harder, expect more from the people and government, improve on all areas of operations to make it happen for us.
It may take at least a year for the global market to understand “Make in India”, but once these collective efforts are proved, the sky would be the limit for Indian manufacturers and suppliers.
We as a leading manufacturer and exporter in textile and apparel will definitely capitalise on it positively. We will join hands with various textiles chapters, organisations and the government to support this call and be responsive in whatever way required.
I believe Aarvee Denims & Exports is planning to increase its market share of premium brand “Aarvee” & mid-segment brands “FW” & “De-Extase” through e-com markets. How are you planning to do this? Can you share some details?
Pankil Shah: The e-commerce marketplace has had phenomenal growth within India. It is expected to grow to $11.8 billion by end of 2015. The average growth is 57 per cent p.a. Out of this, apparel e-tailing has growth of around 8-10 per cent – the third highest after travel and electronics.
We plan to capitalise on this, but be on the conservative side. Selling bottoms online is a challenge where consumers make purchases without trials. Consumers at the same time will never compromise on fits. We have set up a strong technical R&D team, which works on fits collaborating with supporting fabrics, forecasting trends, and delivering fashion at a fast pace.
Aarvee is also now diversifying into apparel. How exactly are you planning to do this? Would you be catering to both international and domestic markets?
Pankil Shah: Aarvee (ADEL) has been producing apparel since 2005, with an initial capacity of producing 30,000 units/month. Today, we are producing 100,000 units/month catering to demands of both the domestic and international markets.
Our company has invested in the best inline laser m/c for all dry process applications, increased our washing capacity to 15,000 units/day. We have also strengthened the washing R&D.
What do you think are the challenges for a denim manufacturer to turn into an apparel producer? How are you planning to reach out to individual buyers? What segment of the market are you planning to target specifically?
Pankil Shah: Unlike denim, the apparel industry is labour-intensive. We need to ensure consistency in manpower strength and their workmanship. Rising manpower costs is also one of the biggest threats. We are increasing productivity to ensure the lowest CMP to compete globally. We are catering to both the mid and high segments. We plan to dedicate production lines for our own labels, domestic buyers, and for exports.
You already supply to leading international brands. Do you think there will be any conflict of interest if you turn into an apparel producer yourself?
Pankil Shah: No. As a policy we work for apparels only for our own fabrics. Our garment customers will be benefitted of the shortest lead time.
In a very competitive market and in a world where quality is the last clincher, how has Aarvee been able to maintain international quality at different stages of production? In other words, what is the clue to your success?
Pankil Shah: We are strengthening our QA team. We believe quality can never be compromised, and consistency in quality is an edge to win our clients' expectations. We ensure continuous training and control of our in-line and final team of operators as well as QA.
Could you share some details about your existing design studio and R&D department? How are you planning to take these to the next level?
Pankil Shah: The Aarvee Design Studio has recently been set up to provide a wide range of elite fashion in denim jeans. Our team of technical experts continuously works on design, wet & dry process which is considered to be heart of denim. Apart from these, we have also tied up with few textile & apparel research companies based in Europe to deliver the needs of our international clients.
Denim manufacturing requires a lot of water consumption. In today's world, the catchword is "sustainability". What are you currently doing to be environment-friendly, and what do you intend doing about this in the future?
Pankil Shah: We are already working with chemicals and processes in washing, which consume less water as compared to standard batch consumption. Also, increasing our laundry capacity by adding few ozone m/c. We also plan to introduce a less-water-consumed jeans range within our flagship brands to bring awareness in society. It will consume up to 95 per cent less water.
Will you tell us a little about your existing brands? And any brand that you might want to launch in the near future? What retail strategy are you adopting?
Pankil Shah: “FW” we are already selling in the domestic market through our company outlets and through our distributor networks. “De-Extase” will be sold exclusively through e-tailers. “Aarvee”, our flagship brand will be sold in the future on e-tailing markets. The e-tailing marketplace is what we prefer to cater directly to prospective consumers.
The landscape has changed radically from the time you started, especially in terms of digital / e-commerce. How are you adapting to this change, as well as the call of the hour?
Pankil Shah: You correctly said the landscape has radically changed. Till 2013, consumers used to buy from offline stores only, mainly by visiting MBOs and malls. Today, with e-tailers offering better price points, prompt deliveries, COD facilities, easy return/exchange, purchase through mobile apps, etc, customers are more comfortable buying online.
Our brands will be available with most e-tailers, a wide range of options to select from with affordable and best buying options. We have a dedicated team to work for online platforms, delivering change in fashion promptly, implementing on consumers' feedback, and working on logistics.
How are you planning to ramp up production? Are your existing manufacturing facilities enough to cater to your current demand?
Pankil Shah: We are planning to increase our production twice over to 2 million pcs/annum by end of this year, and increase our client portfolio.
Could you tell us about your current turnover? Both in terms of financials as well as manufacturing output. What kind of growth are you targeting, say, in the next five years?
Pankil Shah: We are currently manufacturing 85 million metres of denim fabric/annum and 1 million pieces of jeans/annum. Our group turnover is approximately USD126 million/annum.
Today, smartphones and other gadgets compete with jeans for consumers’ attention. The extreme high end of the jeans market remains robust, but the mass market for denim around the world has stalled. The jeans business is cyclical, but scepticism plagues the market. Due to anaemic demand, and an increasing switch to blends, global denim prices are relatively weak. The overcapacity situation has further dampened price levels.
It appears that demand will be stagnant over the next few years. There will be not only fierce competition among major denim producing countries (India, China, Pakistan, Brazil, Vietnam) but within companies of same country too – a competition where severe price wars and over-supply will be dominating. In such a cyclic phase, we do not see an aggressive growth strategy for the coming years.
