The Hindu Business Line : The Classic story

As you step into Tirupur, a certain excitement grips you. After all, this tiny town in Tamil Nadu is indeed a name to reckon with in the global textile market. Home to several garment units exporting to most apparel giants in the world, it wouldn't be too wrong to assume that Tirupur is where the `outsourcing' rage began.

Dotting the dusty roads of Tirupur are several factories - big and small - engaging in just about everything that goes into making a garment. Right from ginning and spinning to dyeing and knitting, all the action happens right here!

While domestic manufacture is expected to bring in revenues of Rs 2,000 crore this year, exports are likely to fetch the town about Rs 8,000 crore, making Tirupur a prosperous belt.

With 3,000 factories engaging in garment manufacture and export, it is quite easy to get lost in the sea of factories. But one company has managed to make its presence felt — with its modern production facilities, scientific methods and eco-sensitive measures.

When factories in Tirupur were drawing a lot of flak from environmental lobbies for their callousness in effluent disposal, the Royal Classic Group took the initiative to not only equip itself with environment-friendly production methods but also stand out as an example for others to emulate.

Not only does it have an effective effluent treatment and a reverse osmosis system to treat polluted water, but the company also practises simple measures to preserve and conserve the ecosystem - organic farming, rainwater harvesting, vermin-compost and solar energy generation, to name a few.

Says R. Sivaram, Executive Director, Royal Classic Group: "Our treatment and reverse osmosis plant removes both salt and colour; no pollutant is let out. About 90 per cent of the water we use is recycled and reused. We believe that investing in technology and a clean environment results in better produce."

From farm to fashion

Royal Classic's factories are self-contained units that house everything from cotton farms, ginning, spinning, dyeing, knitting, printing, embroidery and sewing units with imported machines. The factory even has a hostel for its employees.

A full tour of its production facilities at Andipalayam, Vagarai and Karuvampalayam in Tirupur and Palani takes over two days. Over 3,000 people, mainly women, work in these factories, which produces garment for both export and retail purposes.

Here's a sense of the kind of intensive work that goes into producing the final garment. The process begins with procuring cotton and cleaning it. This is done at the ginning unit (it segregates cotton and the cotton seeds), which currently has a capacity to produce 400 bales a day (170 kg per bale). The ginned cotton is then spun into yarn at the spinning plant, which has the capacity to produce six million tonnes of carded yarn and 6.25 mt of combed yarn per day.

Next in line is knitting. Royal Classic has 40 circular machines from Germany and Italy and a few flat knitting machines from Taiwan with a capacity to produce 10 tonnes of fabric per day. The knitted fabric then goes to the dyeing unit, which has the capacity to dye 10 tonnes per day.

Nothing that is produced at these factories is wasted or released into the environment. For instance: When the residue dye that is removed from the treated water dries, it forms a cake-like structure. which is used as earth filling. Even waste cotton (after ginning) is sold to local ginners to make low-grade garments.

The company specialises in manufacture of T-shirts - right from ginning cotton and producing yarn to knitting and stitching. For its shirts, fabric is outsourced and stitching alone is done in-house. The current sewing capacity for T-shirts is 10,000 pieces and 1,000 shirts a day.

While trousers are currently sourced from Bangalore, the company is setting up its own trouser factory in Palani. It has invested Rs 3.5 crore in the trouser factory; production is expected to start next month. Apart from shirts, Royal Classic also manufactures innerwear under the brand name Smash.

Being a major exporter from Tirupur, the Rs 225-crore company has in its kitty of customers some of the best international companies such as Gap, Sara Lee and Esprit. It exports T-shirts, shirts, innerwear and infant-wear.

Last fiscal, exports contributed about Rs 100 crore to the turnover, with the rest coming from the domestic market. After the abolition of textile quotas, the company has seen a 20 per cent growth in both turnover and production in the export market.

Retail is where all the action is

Although it is a key player in the export segment, Royal Classic also has a small presence in the domestic retail market through its Classic Polo and Smash brands; retail is a segment the company wants to tap in a big way.

Says Sivaram: "We didn't want to be known just as an exporter. Since production has always been our strength, we wanted to build on that and create a well-known domestic brand as well. We started the Classic Polo brand in 2001 with t-shirts. We then ventured into woven garments with shirts two years ago and trousers last year." Based on customer feedback, it also recently forayed into denim-wear.

Volume growth and healthy margins also prompted the retail foray. Says R. Gopalakrishnan, Chairman, Royal Classic: "We are looking at volumes and have a thirst to grow in the domestic market. Initially, when we started exports, there wasn't much buying power in the county. Now, there is noticeable buying power in every segment. Also, exports are affected by geographic, political and climatic factors. Although realisation in exports is quick (turnaround time is 6-8 weeks), margins are better in domestic retail."

Royal Classic's products are sold in 1,200 multibrand outlets and 28 exclusive stores (called Relax Junction), apart from retail chains such as Shoppers' Stop, Globus and Pantaloon. "The target is to have 60 standalone stores by March 2007, especially on high street locations," says Sivaram, who believes large-format stores are the way to go now. The psyche of buyers has changed. Shopping now is for fun and customers look for a relaxed and comfortable ambience. Cramping and congestion are just not helping."

The brand, which is strong in the South, looks to tap the rest of the country. Royal Classic's immediate plan is to enter the West and the company is eyeing the markets of Mumbai, Pune, Nagpur and Ahmedabad.

But isn't finding the right location at the right place a costly affair? Can a brand like Classic Polo, which is still finding its feet in the domestic space, afford it? "Of course, real estate costs and rentals are costly. But there is no use waiting for rentals to come down because they won't. Right now, we are competing with Indian brands but the MNCs are coming.

It may be risky, but that is the order of the day. Otherwise competition will eat you up," says Sivaram.

With the possibility of going public in the near future, Royal Classic is gearing itself up to take on competition.

More Stories on : Brands | Knitwear & Hosiery | Retailing

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