It was a seminar on branding organised by a management association several years ago in Chennai. Dilip Kapur, the feisty founder of Puducherry-based Hidesign, asked to talk about the leather goods brand’s journey, confessed to an eager audience, “I didn’t know that Hidesign was a brand till others began to tell me so.”
From that epiphanic moment to now as a maker of sophisticated bags for an international and growing Indian market, the Hidesign brand story is 35 years old. What started as a hobby from a small hut for Kapur, who had returned to his roots in Auroville in 1978 after earning a PhD in international affairs from the University of Denver, is now a Rs 150 crore business with 74 exclusive stores and 114 multi-brand outlets in 23 cities and sold across 20 countries.
The brand is now at an inflection point, says Kapur, at an exhibition at the Aurobindo ashram’s elegant sea front hall on the town’s promenade. The show highlights the brand’s heritage, its award winning leather bags, with pictures explaining Hidesign’s vegetable tanning process and the making of its solid brass buckles which has made the brand what it is. One of the bags on display, Boxy, won the accessory of the year award in 1992, an award given by Princess Diana. “Where a brand comes from, its story, is important; that’s why we put together this show which will be taken to malls in the top cities,” he explains.
Looking to the future of the brand, Kapur says it has to get much bigger. Some key decisions have to be made by the 66-year-old Kapur who says the passing of the baton to his sons Vikas and Milan will happen over the next few years. “We are now around Rs 150 crore but we should get to Rs 500 crore in the next few years. To get to Rs 200 crore is easy, but at our growth rate of 20 per cent a year to get to that figure will take too long; the market is not going to wait that long for us. We need to be there in the next max five years,” he elaborates. There are other significant changes in the Indian market; for one, there are far bigger players out there. “|It’s becoming less a place for start-ups in the retail space and more one for international players. In fact, if you go to a top mall now, you’ll find Hidesign is perhaps the only Indian brand on the ground floor. We aren’t an Indian brand that does stuff that foreign brands don’t do. We are clearly battling it out in that field which is a modern, cosmopolitan international space,” he explains. Kapur.
Private equity funds have been baying at Hidesign’s doorstep for years, but so far Kapur says the company didn’t need the money.
“Hidesign’s turnover is nothing compared to the brand’s presence; we are getting offers many times over for a stake. People don’t really want to buy us out because they know they can’t run it,” he says. He avers that Hidesign is one of the few brands which doesn’t run an assembly line production but its bags are handcrafted by small groups in its factories.
Weighing options
The flipside of rapid expansion is that it gets riskier. As Kapur points out, today if Hidesign opens 10 stores, may be two won’t work out, but in a faster expansion, it may result in at least five or more not working out. For quick expansion Hidesign will need more capital. “I need to build laterally into footwear; we are launching men’s in a month-and-a-half. And we need to open bigger stores.” The other option Kapur will explore is perhaps to take on board a strategic investor who knows the market. “These are the few options to look at. Remember, we are only one company and the next step is very critical and we don’t want to mess it up. We have to be very careful how we go about it.”
The other big change for Hidesign in the past year is the rapid growth of e-commerce. Through sites such as Amazon and Jabong, Hidesign registered huge sales last month. “We need to capture new markets because we have something special and we can talk directly to customers through e-comm,” adds Kapur.
In the near term, Kapur says scaling up the Hidesign way of producing leather bags can continue. That will not be a bottleneck as people can be recruited and trained. “But, internationally what’s our story? Our heritage is our story, you have to have a reason to exist and there should be a distinctiveness to our work. So, the next steps are very important for us now,” says Kapur, mindful of the future for a brand he carefully nurtured, once he knew he had a valuable one in his hands.