Creative Destruction

Arvind has reinvented itself from a cotton textiles and denim manufacturer, to a branded clothing company. Now, its turning the spotlight on specialty retail

- Krishna Gopalan

Sanjay Lalbhai is effortlessly stylish. The dapper 63-year-old is dressed for this meeting in trendy nylon trousers he picked up in Japan, an ultra-lightweight black blazer and white linen shirt. “I shop both at home and overseas. I like checking out new brands, apart from wearing my own,” he says. Shopping for clothes can be a bit of a busman’s holiday, though, given the Arvind Group chairman’s line of business – at last count, it had a portfolio of around 30 apparel brands, many of them global high street icons on licence to the Ahmedabad-based apparel and retail major. But Lalbhai’s not complaining; Arvind has come a long way from when he took over in the 1980s. Lalbhai transformed the family- owned cotton textiles company into one of the world’s largest denim manufacturers and then, a few years later, steered it out of humongous debt and oversupply into the apparel and retail business. The strategy is working: in FY17, Arvind Lifestyle Brands clocked revenue of ₹2,900 crore, 26% more than the previous year. Profit, too, has doubled from ₹29 crore to ₹58 crore during the same period. Not bad at all for a company, which at a group level, had a debt of ₹2,270 crore and a loss of ₹70 crore in 2002.

Precisely why eyebrows are being raised over Arvind changing its strategy yet again. Industry estimates suggest the lion’s share of revenue (₹2,300 crore of last year’s ₹2,900 crore) comes from the branded apparel business. Of this, although it has a portfolio of over 30 brands, just three “power brands” – US Polo, Arrow and Flying Machine – bring in about ₹1,700 crore. Lalbhai categorically denies the overdependence on these brands being a cause of worry. “The power brands are growing each year and many of the others are pulling their weight. That will lead to better growth rates and margins as well,” he says firmly.