With strong brands, wide distribution channels, strong presence in tier-II and tier-III cities, increased manufacturing capacity, emphasis on the latest designs and affordable pricing, Siyaram Silk Mills aims to become a Rs. 2,000 crore company by March 2015. One of the company’s key strategies revolves around aggressive advertising with celebrity endorsements
‘Come Home to Siyarams’ has been the advertising philosophy that Siyaram Silk Mills (Siyaram) has stood by in the last 35 years of operation in the textile industry. While the interpretation of this statement varied from one decade to next, the fact remains that it created an instant recall for the brand. “Today, this statement signifies the opportunities available in India to those who are working for years in the overseas market and are returning back to their own country,” states Ramesh Poddar, vice chairman and managing director, Siyaram.
The company is using celebrities extensively to build on this consumer connect. Over the last three to four years, the captain of the Indian cricket team, M.S. Dhoni has been the face of Siyaram. “We want to go aggressive with our marketing and brand building activities. We want to amplify the celebrity space and in the process our brand presence, on a national level,” says Poddar. Siyaram spent around Rs. 30 crore on advertising in FY13. It has aggressive marketing plans for FY14 with a budget of around Rs. 35 crores and its brand would be active on television and print on a sustained level.
With a presence across fabric, readymade, yarn and home furnishing businesses, the Siyaram brand remains a popular household name and currently has a market share of 15 per cent in the textile market. In the fabric business, the company has brands such as Siyaram, J Hampstead and Mistair. In the readymade (apparel) segment, it has brands – J Hampstead, MSD and Oxemberg. It recently launched three brands – Royal Linen (linen fabrics for men and women), Moretti (cotton shirting) and Zenesis (cotton suitings) and these are contributing well towards the company’s growth. In the furnishings segment, it has launched Casamoda which is steadily gaining popularity. In addition, the yarn division is stabilising steadily and increasing its production activities.
The company is also focusing on developing a strong network in the domestic and international markets. It already has a strong distribution advantage through its pan-India network. It follows an agent-dealer-retailer distribution channel. This helps it reach the most remote towns with ease. Today, Siyaram has over 600 dealers pan India and its products are sold by over 1,00,000 retailers across the country.
In an industry like ours where consumers have access and exposure to world-class fashion, continuous launches of new products and value-added services are extremely vital.
Fabrics and apparels account for a large portion of its growth. “Revenue from fabrics alone adds upto about Rs. 924 crore while the apparels revenue is projected to be around Rs. 150 crores for 2013-14,” states Poddar. And to enhance its growth, the company is in the process of increasing its manufacturing capabilities. With a capital expenditure of Rs. 200 crore to be spent over a span of two to three years, it plans to add 400 machines in the ready-made garment segment and 286 looms in the fabric segment. Out of this, it has already installed 129 looms and 101 readymade garment machines. “In the current fiscal (2013-14), we will be installing 75 looms and around 200 readymade garment machines along with balancing equipments,” confirms Poddar. This expansion will lead to an increase in Siyaram’s capacity to 120 lakh metre per annum in the fabric sector (from the current 60 lakh metre per annum) and to 3.5 lakh pieces of garment per month (from the current 2.5 lakh pieces).
While the company reported a mixed set of numbers for the fourth quarter of FY12 – its revenues stood at Rs.290 crore for Q4FY12, higher by 8.3 per cent despite subdued consumer sentiments. Its operating profit margin dipped by 189 basis points year-on-year to 10.05 per cent, which was mainly because of higher employee costs and other expenses. However, the current fiscal has commenced well. A market leader in the blended fabric segment, Siyaram is hoping to touch a turnover of around Rs. 240 crore in the first quarter of the current fiscal. Poddar says, “After the slump in the textile industry for the last two years, there is a silver lining of improvement in the current year.”
Over the next two to three years, the company expects its retail expansion (an asset light model) to be an important growth driver. Currently, there are 120 exclusive showrooms across the country and Siyaram expects to scale this up to 200 in the current fiscal. It is also witnessing growth from the tier-II and tier-III towns of India. “Our module is viable for franchisees to invest in our business as it is a one-stop-shop that offers everything from fabric to apparel,” says Poddar.
Secondly, new product launches have been a key growth driver for the company. It is churning out new products with the help of its in-house 100-people strong research and development team. The team works towards capitalising, analysing and forecasting trends from the other parts of the world and tries to bring these to India. “The biggest advantage that we have today is that all our facilities are in-house and the turnaround time to detect fashion trends, create products and launch them in the market is much less when compared to competition,” declares Poddar.
Thirdly, the company’s readymade category is expanding with brands like Oxemberg and J.Hampstead apparel slated to become national players. Oxemberg, a brand which has been with the company for almost 20 years, will be the focus brand for the next couple of years. So far, Oxemberg has very little pan-India presence and hence, investments will be made to build the brand and scale up its distribution. “We feel that in the next one or two years, Oxemberg will become a Rs. 100 crore plus brand for us,” says Poddar.
The company is also planning to focus on its fabric and the ready-made brand, J Hampstead. Actor Hrithik Roshan is the celebrity endorser for the fabric segment of this brand and Siyaram plans to make him the face of the apparel brand as well.
This apart, the demand drivers are unique to each brand of the company. For instance, Siyaram is essentially a mass market brand. So the larger market is in the tier-II and tier-III towns. J.Hampstead is a premium brand and signifies luxury and persona and hence, the larger brand pull comes from metros and mini-metros. The home furnishing business is a market where demand comes from the metros and mini-metros alongside demand from the tier-II and tier-III towns.
Innovation, the key
“In an industry like ours where consumers have access and exposure to world-class fashion, continuous launches of new products and value-added services are extremely vital,” says Poddar. And hence, Siyaram firmly believes that in the coming years, innovation will be its key differentiator which will help it provide international quality products at affordable prices and also launch products that a mass consumer can essentially benefit from.
A publicly listed company, it is currently trading at Rs. 242.70 in the Bombay Stock Exchange and offers earnings per share of Rs. 58.70 to its shareholders. “Siyaram, today, is a Rs. 1,300 crore brand and we hope to become a Rs. 2,000 crore company by the end of March 2015,” says Poddar. With strong brands, wide distribution channels, expanding manufacturing capabilities, strong presence in tier-II and tier-III cities, new product launches, emphasis on the latest designs and affordable pricing, it is all set to achieve this growth number.
Siyaram Silk Mills
Founder : Late Shri Mahabir Prasad Poddar
Year : 1978
City : Mumbai
Turnover: Rs. 2,000 crore by FY15
- Continuous launch of new products
- Expand manufacturing capacity
- Increase franchise network to 200
- Oxemberg and J.Hampstead apparel to become national players