Nandan Denim Ltd. (NDL) which crafts 110 million metres of fashion fabrics annually is gearing up for new innings. NDL, which began with a 6 million-metre annual capacity in 2004, now crafts 110 million metres fashion fabrics annually. The company is preparing to fulfill its strategic vision of emerging a global leader in the textile industry. Mr. Deepak Chiripal, CEO, Nandan Denim Ltd., shares his dream of taking denim to the next level.
The time that NDL started manufacturing operations coincided with the removal of the quota system in the US market and, therefore, everyone was bullish about textiles. But within the denim sector there were more failures than successes. “I had entered the business after my initial internship in the Chiripal Group companies at the age of 25. I had conviction that we were entering a correct line of business, but the empirical data about some of the senior players in the sector were contrarian,” remembered Mr. Chiripal.
There was a dilemma in entering a sunrise industry but peer pressure to perform. The optimist was confident about success, but wanted to tread cautiously. So the company began with modest capacities of six million metre annual capacity. Denim may be a tomboy fabric, but it put things in perspective.
To put it in Mr. Chiripal’s words: “The rest is a memorable journey of sleepless nights and engineering across the plant to develop the products, endless meetings with customers and market surveys.”
Global outlook
Under the stewardship of Mr. Chiripal, NDL is in the process of initiating internal projects that would be a paradigm shift in the way the company functioned previously. The internal projects, to begin with, are woven around brining efficiencies in quality, delivery and waste control based upon proven Japanese methodology of Kaizen. “We have just attained global scales, and now we need to internalise the global way of doing business,” said Mr. Chiripal.
The process typically would begin from the induction of an employee and regular performance monitoring round the year to make each individual accountable for the assigned set of responsibilities.
Right from the beginning it was intended to create a company resilient enough to sustain any adverse business cycle that can capture every upturn in the industry. That’s how in the last five years NDL is managing strong CAGR of 20 per cent in sales and 36 per cent in net profit. NDL, to couple one of the largest product baskets for denim, has created product diversity in its portfolio through addition of yarn dyed / solids fabric business with an initial capacity of 10 MMPA.
Keen to explore uncharted avenues, Nandan Denim plans to create a portfolio of hybrid brands straddling across consumer segments and price points. “Post our current expansion, on which we are almost done, we intend to build internal competences to exploit wealth of the experience we have acquired in the last decade to take NDL to the next level of offering a product for each of the customer segments,” he said, by way of explanation.
Once the expansion plan is complete, the company will be in a position to capitalize upon higher capacity and advantages of vertical integration in creating product-market diversity, apart from cost optimization to generate additional profits. “We look forward to have better performance in terms of top line, profitability and return to shareholders over the period of time,” he said on an optimistic note.
Product Quotient
The company has set up an in-house creative design studio and product development cell. The studio is managed by a team of designers and technocrats from India’s premier art and design, textiles and technology learning and research institutions. The cell’s continual focus is on new market trends, fashion and product requirements meeting customers’ needs to have a larger share in the sales pie. “We are looking to increase our share of value-added products and adding more processing facilities coupled with innovative / Fashion First products. This will enable us to manufacture a wide range of denim fabric, fetching higher average realisations and profitability,” he said, sharing his forthcoming plan.
Nandan Denim aims to achieve cost optimization and benchmarking efficiency at its manufacturing units. Another priority is fabric innovation, which is why the earnings made in the business are ploughed back to the business to cater to the domestic and international markets. “We are also well-positioned to capitalise on the soaring export demand. With our fully integrated manufacturing facility, our objective is to cater to the needs of customers by providing a variety of products under a single roof. We are hoping that the on-going expansion in denim fabric capacity and backward integration will better our operating margins and return ratios,” he highlighted.
Futuristic trends
Denim, a revolutionary fabric, is spreading its flavour across India. The retail revolution in India is fuelling the growth of the denim fabric in India taking it to Tier I, II, III towns and cities. Consumers have begun to understand that denim offers value for money, fashion and style quotient, while maintaining versatility in the products.
“The domestic denim industry in India is growing at 18% per annum. Currently, the installed denim capacity in India is 1.2-1.3 billion metres per annum, against which the actual production is 1-1.1 billion metres, of which around 70% is consumed within India and the balance is getting exported,” explained Mr. Chiripal.
Denim is becoming a staple product for each wardrobe despite India having one of the lowest per capita consumption in the world. The top 10 cities of India, with 8-9 per cent of total population, contribute almost 50% of the denim consumption in the country while the rest of the country contributes the remaining. So growth potential is huge. Demographically, 85% of the consumption is with the male segment, whereas almost 50% of Indian population in the women segment account for less than 10% consumption offering high upside.
That leaves a lot to be fulfilled.