Margadarsi plans readymade garment foray

Chennai: The Rs 5,000-crore-turnover Margadarsi-Eenadu group has decided to enter the readymade garment sector. Margadarsi Apparels, a garment company, has been assigned the task of studying the market for KSA Technopark, New Delhi.

"We are looking at an outlay of Rs 100 crore for the project to be located in Hyderabad," says Margadarsi Chit Fund managing director Sailaja Kiron. "We plan to sell garments in the Rs 300-Rs 500 bracket — presently a vital segment not addressed by the existing players."

The other factor in favour of the group’s entry into the garment sector is its strong presence in the media sector — print and visual — across India, which will help in building the garment brand at a far cheaper cost.

The group’s Telugu newspaper, Eenadu, is the largest-selling daily in Andhra Pradesh with a circulation of 9 lakh. Further, the group owns 11 regional language satellite channels with some occupying the top slot in viewership. The group also has interests in chit fund, hotels, film production and distribution, film city, packaged foods (pickles, masala powders) and retail handicrafts sale.

About the chit fund business Kiron says the company will first saturate the southern markets before venturing into other parts. "Ten years back we were not in Tamil Nadu. Three years ago we entered the Karnataka state."

An MBA from PSG College of Technology, Coimbatore, and an English literature graduate, Kiron played a key role in taking the chit fund business (auction disbursements) from Rs 100 crore in 1990 to Rs 1,750 crore last year. For the current year the auction turnover target is pegged at Rs 2,000 crore.

The growth came about by rapid branch expansion, primarily in Andhra Pradesh and later in Tamil Nadu and Karnataka. Her company has 57 branches in Andhra, eight in Tamil Nadu and six in Karnataka. "By 2008 we are planning to have 160 branches, with at least 50 branches each in Tamil Nadu and Karnataka," she is hopeful.

Margadarsi Chit is the only company that proclaims payment of chit amount within 72 hours of submission of papers. Taking a dig at the competitor Shriram Chit, Kiron says Margadarsi Chit does not indulge in offering gifts to enrol members. "Our member-base is 2.7-lakh-strong, which is serviced by 2,500 employees and 25,000 agents."

Kiron says the chit fund culture has taken deep roots in the southern states probably due to the savings culture among the people of that part of the country. The other way of looking at the phenomenon is the borrowing mentality of the populace.

"The company earns 5 per cent as foreman commission on auction disbursements. We invest the surplus in real estate — land and building — after meeting statutory reserves and expenses," she says.

Each registered chit fund company has to maintain a fixed deposit in a nationalised bank or show a bank guarantee that is equal to the amount of chit scheme till its end. "Our statutory deposits will be around Rs 70 crore," she sums up.