B2B is all set to acquire a new meaning. For the south-India based Virudhnagar Textile Mills this means bath-to-bed. This is the mantra being followed by this company as it sees a gold mine in this chain in the rich and upwardly mobile persons' homes.
Virudhunagar has decided to strike rich with its Suvasa brand fine cotton bedspreads, pillow and cushion covers. Interestingly, Suvasa is the group's major domestic initiative. While the Rs87-crore-turnover Virudhunagar Textile Mills earned Rs68.86 crore from exports, the group's flagship company, Thiagarajar Mills Ltd., accounted an export earnings of Rs107.71 crore in its turnover of Rs111 crore. So what prompted Virudhunagar Textile Mills to get into the domestic premium bed linen market? "Our study said there was space for premium bed linen in the Indian market and then we decided to leverage our export experience," explains Mr. Karumuttu T. Kannan, chairman. The company had hired KSA Technopak to do a detailed study about the prospects for premium bed linen. According to KSA Technopak's findings, the Indian home textiles' market – bed, bath and kitchen linen – is worth Rs1, 800 crore. Of that, the bed linen segment accounts for 55 per cent, while the share of bath and kitchen linen is 40 and 5 per cent respectively.
According to Mr. Kannan, a major portion of the market is dominated by unorganised players where branding is nearly non-existent, the exception being Bombay Dyeing commanding a good brand recall. The other findings of KSA Technopak's study are that the market is dominated by floral prints and abstracts. Geometrical prints are rarely found. These two points, coupled with the trend of people deciding to dress up their bedrooms and the experience in catering to overseas market, prompted Mr. Kannan to get into premium segment. Though the decision to launch it domestically was taken only now, Mr. Kannan was in fact toying with such an idea for the past two years. He tried to work out a joint venture with Calefii, Italy – a design house that used to import good quantities from Virudhunagar Textile Mills – but didn't succeed on the royalty payment terms.
Suvasa initially launched in Tamil Nadu, will later be introduced in all other southern states. "Based on our experience, we will soon go national," remarks Mr. Kannan. Given the brand's premium positioning, the company is targeting only those retail outlets, which frequented by high networth families. It is here that the company is experiencing a slight problem. Destination stores like Lifestyle, Globus, frequented by high-spending shoppers, are already selling imported premium bed sheets and getting 'Suvasa' onto their shelves is what Mr. Kannan is finding it difficult. This is despite a whopping 40 per cent retail margin that products like this command. "We are negotiating with big stores," is all that he is willing to say on the issue. However, he is not in favour of having a company-owned outlet. "Boutique business is not economical as they don''t sell much," he reasons. While ladies nightwear is the product extension elsewhere in the world, Mr. Kannan says the Indian market condition varies slightly. However, the company will be launching premium bath towels, gift sets and curtains soon. The domestic market entry doesn't mean that the company is getting away from exports. According to initial estimates. 'Suvasa' will earn around Rs12 crore during the first year. With a capacity of nearly 10 lakh metres, exports will continue to be the company's main stay. As a matter of fact, this zero-debt company spent Rs8.5 crore last year to replace 28 shuttle looms by Projectile Looms. "We are still competitive when compared to many other countries and the phasing out of quantitative restrictions will not be a major problem," assures Mr. Kannan.