In conversation with Venkatesh Rajagopal, founder and Chairman of Indian Terrain Fashions
For an endurance cyclist, the ability to retain speed, sustain the excitement and stay long enough on the saddle for lengthy rides is crucial. And when I learnt that Venkatesh Rajagopal, the man behind the branded apparel retailer, Indian Terrain Fashions, is an endurance cyclist, my first question to him was a tangential one – whether his endurance rides had had an impact on his entrepreneurial journey?
He shot back right away: “Cycling makes me connect with what I want to do and puts my senses on the edge. This in turn allows me to be creative while building a long term business. When I ride, every nerve in my body is screaming for alertness, which is the kind of attention I bring to what we do at work.”
“In FY 2016, Indian Terrain clocked a total gross revenue of Rs. 500 crore,” says Rajagopal, and he is convinced that his traits of alertness and attention to detail, will help the company scale up further and, more importantly, shape up Brand Indian Terrain.
Currently, the company has a pan-India presence across 1500 doors, across 250+ towns and cities. In addition to being present at multi-brand outlets, the company also operates 120 exclusive brand outlets, where it has seen 10 per cent same store growth over the last two years and plans to add 15 new stores in the next 2 quarters.
In the coming fiscal, it has set itself a growth target of 20 per cent, even as the leadership team at Indian Terrain is charting out a growth plan to become a Rs. 1,000 crore brand over the next three years. While it’s flagship menswear category is the primary growth driver currently, the recently launched boys wear and footwear segments are interesting extensions.
The early days
A graduate from the Delhi School of Economics and postgraduate from Bangalore University, Rajagopal worked in the IPS for almost 10 years. However, he chose to move on and shifted base to Chennai where his journey as an entrepreneur began. “I knew I had to do something in manufacturing and wanted to create an institution,” he remises. His entrepreneurial journey began in the year 1988 when he started manufacturing apparel for the export market. In the year 2000, he understood that the domestic consumer market was large and the products that he was exporting to GAP, Tommy Hilfiger and other brands, had tremendous opportunity in India, if made with the same flair, style and colour. And hence, Brand Indian Terrain was born with a flagship store in TKK Road, Chennai. With an initial investment of Rs. 30 crore and a working capital of another Rs. 20 crore, Rajagopal and his team established an Indian apparel brand that would be defined by quality and style, inspired by sportswear and semi-formal attire worn in the West. However, in 2010, Indian Terrain demerged from the New Vernon Private Equity-backed Celebrity Fashions, the parent company, and this demerged entity was listed in the market as Indian Terrain Fashions (Celebrity Fashions went public in 2005). It is currently trading at Rs. 149.85 (Oct 07, 2016) and has a market capitalisation of Rs. 558 crore.
The company currently has men’s apparel, boy’s apparel (launched in September 2015) and the more recently launched men’s footwear in its stable. Its major collections come out in two seasons – Spring-Summer and Autumn-Winter. It also has two flash collections each year. “This is a quick response to market feedback,” says Rajagopal. While the major collection takes 150 days from concept to store, the flash collection takes 60 days.
Keys to scaling up
With an entrepreneurial journey that spans over two decades, Rajagopal believes that to build and scale a long term business like his, one needs to operate at an affordable price point, ensure quality and deliver on distribution to reach a particular scale. Store location is crucial, especially from a brand recall perspective. “This apart, one needs to pay attention to constantly evolving international design trends,” explains Rajagopal.
Building brand salience
“Two years after launching Brand Indian Terrain, I realised that we didn’t have enough salience,”recalls Rajagopal.That’s when Times of India started an initiativeto swap equity for advertising space. “They gave me Rs. 25 crore worth advertising in TOI to be used over 2.5 years, while I in return gave them a 11 per cent share in my company,” says he. And that, the entrepreneur believes has been crucial in terms of advertising and communication strategy, with minimal impact on cash flow.
Two years back, the company realised that it had to build an identity for itself and not just be known as a sportswear company that tries to emulate the American style. It has currently brought in a Madras connect with global fashion in apparel (Madras Fabric) as well as in the displays and visual merchandise in stores.
Its focus over the next few years is to subtly drive the message that, while it has the design philosophy of American sportswear brand, it is born in Madras whose spirit is Indian.
“Cycling makes me connect with what I want to do and puts my senses on the edge. This in turn, allows me to be creative while building a long term business. When I ride, every nerve in my body is screaming for alertness, which is the kind of attention I bring to what we do at work.”
Bringing in the right partners
Currently, the company has 120 stores across India and has aggressive expansion plans. Highlighting an important milestone, the Chairman says that in the large format outlets like Lifestyle and Central, over the last two quarters, Indian Terrain has been among the top selling brands. Rajagopal believes that such success comes with being innovative and building deep trust-based relationships.
As far as the online strategy goes, the management team believes that online channels are discounting to get their own slice of the market. “If you are not sure about what you want to do, then your product will get chopped. And you will also end up antagonising your offline partners.” Hence, a year ago the company moved away from outright sale on online channels to a different model of business. It now works with select partners like Myntra, Amazon and Flipkart and has its own ecommerce website, indianterrain.com.
According to the company’s annual report, net revenue has grown from Rs. 141.56 crore in FY12 to Rs. 325 crore in FY16. For the same period, its profit has grown to Rs. 33 crore in FY16 from Rs. 1.77 crore.And to ensure that the company retains its pace of growth, over the next couple of years, Rajagopal’s top priority is to increase the degree of awareness of brand Indian Terrain at a national level, much more than what it is today. While the company’s apparel is present all over the country, Rajagopal still feels that large parts of India still is unaware of the product. “We need the next big push with respect to building the salience,” states he.
Apart from growing its menswear brand, the company is working towards building its one and half year old boys wear category. “Clearly, the mother has to get influenced. We are a menswear company selling to the boy where influencing the lady is important and we don’t have something for her. So our focus is now to identify how to attract the mother to a men’s store to buy a boys products,” states Rajagopal. Its other area of focus is on the recently launchedfootwear category. “We recognise that we are an apparel company and our idea is to style you and give you the complete ensemble,” states Rajagopal.
With its strategies in place, the company is all set to become a Rs.1,000 crore brand with boys business contributing Rs. 200 crore; footwear Rs. 100 crore and menswear Rs. 700 crore in revenue. “Of course, over a period of time we’ll explore the women’s wear segment as well,” says Rajagopal on a parting note.
A MAJOR LEARNING EXPERIENCE
We realised very early on in the journey that retail, especially apparel retail, was not only about making a great product. The right store size, the right partners for distribution, ability to forecast fashion trends, manufacturing processes to ensure the right margins and last but not the least, a robust brand strategy, are all crucial parameters.
– Grow the footwear segment, launched in October 2016
– Execute rapid growth in men’s wear and boys segments
– Work towards becoming a Rs. 1,000 crore brand within the next 3 years