Companies

Ramraj weaves a success story with labour innovation

Bharani Vaitheesvaran Chennai | Updated on October 21, 2013

K.R. Nagarajan, Founder-Chairman of Ramraj Cotton

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Over 30 years ago, K.R. Nagarajan quite literally stumbled into the business of veshti ( dhoti).

A failed joint venture in Tirupur, the textile capital of Tamil Nadu, left him with dhotis worth Rs 85,000 in return for his investment. He hit the familiar ground of Rayalaseema, where he had worked as a marketer for his previous employer, just to wash his hands off the stock and retrieve his money.

But, seeing the demand for dhotis in Rayalseema, he hit upon a new business idea. “I realised if I improve the quality of my cotton, which nobody even tried back then, I could generate a business out of this failed attempt,” he said.

He knew that in Tirupur, when people were not labouring in the fields, they were making knitwear in handlooms, found in almost every backyard. He recalls: “I went about town telling people, ‘Agriculture is not looking so good. I’m back from Rayalaseema and there is a good price for dhotis; will you make them for me’?” The word spread.

His offer to farmers to shift to textiles came in late-1986, at a time of drought. The cooperative banks were wiling to lend as the alternative was giving out more farm loans, which would only translate into more bad debt. Sourcing 80s-count cotton, which Nagarajan found prohibitively priced even then, he engaged some relatives and friends in Tirupur to make dhotis at his wholesale unit. With his first batch of white veshtis, Nagarajan approached a retailer in Rayalaseema and pitched his goods at Rs 110 apiece when the going price was Rs 60-70.

“I said I’ll pay him for unsold goods, but the price stays. I went back after a week to know if my dhotis found purchase, and the man said people wanted more of my dhotis.”

RETAIL FORAY

The company’s retail entry was a coincidence. In 1999, the Tirupur wholesale unit moved to a more spacious location. “The original place was lying vacant. And since people by then wanted a showroom experience, I decided to set up an outlet there,” said Nagarajan. His parents took care of the first show room.

“It was only after my Coimbatore outlet in 2003 that I decided to open more stores, as they create a touch point with customers,” he said. T. Kannan, Managing Director, Thiagarajar Mills, who has seen the rise of Ramraj, said the business concept was innovation in labour: Instead of recruiting staff, he convinced weavers to take up contracts, saving him the capital on machines and land.” Now, over 1,000 families in the Tirupur belt have contracts with him. “It is one of the most successful brands in the last decade,” said Kannan.

SUB-BRANDS

Ramraj engages 4,500 workers to convert 2.5 lakh metres of cotton yarn into dhotis, shirts and innerwear every day. It sources over 2,000 varieties of cotton once a year to beat cotton price fluctuations.

The brand now has six sub-brands for t-shirts, running pants, innerwear, silk dhotis and shirts, women’s wear, children’s dresses and linen apparel. By April 2014, these brands will graduate from Ramraj outlets to the shelves of multi-brand operators, where they will stand collar to collar with global brands.

Dhotis and shirts are Ramraj Cotton’s bread and butter — over 95 per cent of its revenues come from them. As the company heads towards the Rs 1,000 crore revenue mark, it looks to expand its brand through t-shirts, women’s wear and silk apparel.

Nagarajan is not even looking to tap the young fascinated by international labels. “There are two sides to the India fashion story: Western styles and its stitching standards and, on the other side, the average price-conscious Indian who is middle-aged and does not aspire for big labels. There are plenty of them.” His target group for t-shirts is the 35-year-old.

After a three-year lull, textile exports have begun to pick up now. In Tirupur, orders for shipment from the West are streaming in, but there is a shortage of labour. But given Nagarajan’s flair for making people work for him, it should not be difficult even this time around.

>bharani.v@thehindu.co.in

Published on October 21, 2013

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