| 28 March 2015
Suresh P Iyengar
The Hindu Business Line
Grasim Industries made its venture into retailing women garments. With an assured supply of raw material (VSF) and vast experience in retailing, the group has thought out a strategy by tying up with the value chain for processing VSF into garment. KK Maheshwari (KKM), Managing Director and Adesh Gupta (AG), Whole Time Director & CFO, spoke to BusinessLine on the road ahead. Excerpts:
Why launch a new brand and venture into retailing when the existing players are finding it difficult to survive?
KKM: We have done our research on the market and the product for the last two years. We felt the need to create a consumer-centric approach in the VSF business. A lot of time and effort has gone into choosing the right partners. Liva not only satisfies the aspect of being a natural product, but also delights customers on the distinctive aspect of its soft drape and pleasant colours. We target to sell about two million pieces in the first year. The brand Liva is simple, meaningful and an attractive proposition of Natural Fluid Fashion.
What is the assurance that the 250 Liva Accredited Partners Forum will cater only to Grasim?
"It will be difficult to quantify the sales of Liva in rupees, but I can tell you the Liva garments will use VSF worth Rs.6,000 crore in the next one year."
— Adesh Gupta, Whole Time Director and CEO
KKM: It is not necessary that they should cater only to us. If somebody is selling garments from fabrics produced by our partners it will only help develop the market. However, the customers will miss out on the exclusive designs and various other things that come with the Liva brand. Over a period, customers will distinguish Liva and other VSF garments in the market.
What is the sales revenue you are looking at from Liva for the next fiscal?
AG: It will be difficult to quantify the sales of Liva in rupees, but I can tell you that the Liva garments will use VSF worth ₹6,000 crore in the next one year and these VSF would be supplied from our own plants.
Do you expect VSF prices to fall further?
"We felt the need to create a consumer-centric approach in the VSF business. A lot of time and effort has gone into choosing the right partners."
— K K Maheshwari, Managing Director
KKM: We expect pricing pressure in the short term. VSF prices have fallen because of drop in cotton prices. However, of late, cotton prices are showing signs of revival. It cannot fall below a certain level as farmers will not make money. We have already seen acreage under cotton crop coming down. The depreciation of currency has also played a role in pushing up cotton prices. For instance, in Brazil, one of the largest exporters of cotton, currency depreciated big time against dollar. It is now trading upward of three Real per one dollar. It makes exports attractive from the country.
When will the merger of Aditya Birla Chemicals and Grasim be completed? How much promoters’ stake go up by?
AG: The merger process is expected to be completed in six months. The promoters’ holding will go up by less than one per cent as Grasim will issue fresh shares. The merger is as per the stated principle of the Group to consolidate business with related interest. It will also help allocate funds freely for expanding chemicals business.