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Trailblazers | December 2018

Foray into cotton soon: MD of OCM

OCM, a household name in India, is well reputed for its quality and is one of the leading names in the fabrics, apparel and fashion industry. “OCM (formerly known as Oriental Carpet Manufacturers) began its journey in 1924,” said Ashok Handa, OCM’s Chief Operating Officer, with his suave smile, radiating positiveness. Handa has a rich experience of almost 40 years in the company.

Taking through the journey of OCM, Handa added: “In 1972, the company forayed into manufacturing of worsted fabrics for the India market and many overseas markets. Till 2017, WL Ross & Co, the private equity firm founded by billionaire and current US commerce secretary Wilbur Ross, owned OCM. Today, the company’s ownership lies with the promoters of the Donear Group and HDFC. The company has its factory in Amritsar (Punjab) and a corporate office in Delhi.”

The company has a sprawling 37 acre complex that houses a new-age plant with an annual capacity of 8 million metres of fabric and an employee base of 1,900. With an extensive wool based product range, it is the second largest manufacturer of worsted fabrics in the country.

Grado: The new-age fabric
Speaking on Grado, Vikram Mahaldar, Managing Director and Chief Operating Officer of OCM, had this to say: “Grado is a perfect amalgamation of the finest quality, trendy designs and vibrant colours, the perfect fabric for all occasions under one brand. We are proud to introduce Grado’s unique features apart from its rich repository of fabrics and apparels, the wrinkle freeness, the lustre so we apply to cotton, that cotton fabrics which is done with an ammonium finish all the wrinkle free properties and the lustre of any other fabric.”

On Grado’s uniqueness, Mahaldar says, “Over the years, the company has developed many types of fabrics. But with Grado, we are planning to target the younger audience too. We are going to enhance our product basket. We are going to give them larger colour options like pastel colours. Our catalogs will show them the innovative methods a product can be stitched. They can be different from the other in the crowd, which today’s youngsters need. That is what makes Grado different from other brands. We have more infusion of colours, varied designs, and the catalogs targeting the younger customers, which was missing from our other product. At every stage of a product—the design, colour, etc.—we have set a benchmark. It has a price point of Rs 250 or Rs 10,000 per metre. We are offering the best at that particular price.”

Why the name Grado? “Since Grado is a luxury fabric, we wanted to name our product on the same lines. Rado is known for its high-value watches, Prado is known for its luxury cars, the same way “Gra” comes from Grasim and “Do” said Amar Sukhwal, Head - Product Development.” Added Sukhwal, “Every year, we come out with two collections – one for the winter and the other one for summer.”

Speaking on the target segment, Mahaldar said: “Typically, Grado is coming from two houses – OCM and GBTL. Traditionally, before the amalgamation of these companies, OCM had around 35+ years of experience. We were already into selling premium fabrics. The market for our product was for 30 to 55 years of age. Even for PV fabric manufacturers, the segment is for 25 to 50 years. After the amalgamation and having Mr Amitabh Bachchan as our brand ambassador, the idea was reach out to these young population, which is around 50 per cent.Eventually, they are going to be our customer in the next few years. And therefore to reach out, we came out with a new look, which is backed by our rich heritage. The colour and textures that we are giving in our product is to appeal even the 20+ years of customers.”

He added, “So we are not only targeting 30-50 years of customers, but also targeting 20- 30 years of customers as well. Technically, our target has been 30 to 50, but now for the last six months or so, we are constantly targeted 20 to 30. Our advertising and marketing will be focused more on this.”

On retail distribution of Grado fabric, Mahaldar says: “Both the companies that are producing Grado fabric have different distribution networks and will continue to be different. GBTL supplies primarily to wholesellers and from wholesellers to various retailers. They supply to over 20,000 retailers through their own sales network. OCM has a different distribution model. We supply to wholesellers and to retailers directly. We cater to around 1,500 retailers across the country and the select 50 wholesellers sell to another 5,000 retailers. Our product is more premium and therefore only the top 3-4 retailers sell them. This is because it is more niche and more premium. And Grado from the house of GBTL is also premium, but the larger chunk is catered to the mass network.”

OCM’s distribution will continue to be different so that we can supply the entire spectrum of customers and length and breadth of the country. On online foray, he says, “Yes. We plan to sell it online. Initially, OCM and GBTL have tried their hands online, more through the multi-brand networks. But now, after having established Grado, every retailer in India wants to sell it. There’s a strong demand in the last six months, and to cater to the demand, we plan to sell it through online portals. We have started our Facebook and an Instagram page. We are collecting more data and references. Very soon, we will have our own portal and will have Grado in online presence also.”

Foray into cotton
Added, Mahaldar: “Consumers are becoming more choosy. In winter, they prefer wool and wool blends, but for summer, they want cotton. Although, OCM has been present in cotton for the last 20 years, but it is more in the ready-to-wear packaging. Cotton ready-to-stitch category has been coming up in the last 3-4 years because the tailors are [now] more equipped to stitch cotton fabric too. Earlier, cotton had more of a denim kind of finish. Because of this, tailors faced difficulty in stitching. But now the finishing technology has improved and the tailors can easily stitch cotton. Therefore the demand has increased.”

“Grado—both from the house of GBTL and OCM—has been owned by Donear, who themselves have very good experience with cotton. So why not encash on the summer period of January to June. We are coming out with the largest range of cotton jackets and trousers in January 2019 – both from the house of OCM and GTBL. We want to cater throughout the year. We want to cater not only the formal wear segment, but also the casual wear segment. Also cotton is the largest selling blend in the country right now,” added Mahaldar.

Strong export presence
OCM has moved onto a new charter of transformations across manufacturing, product development and in revitalising the well reputed OCM brand, in the Indian market to strengthen its business in India, and the overseas markets. Added the CMD, “Grado from the house of GBTL is very strong in the export domain. The US and European markets continue to be their strong markets. Grado from the house of OCM, typically from the last five to six years, were exporting mostly to the US and European markets.

But now we supply more to the Far East and the Middle East. Break-up wise, OCM does 70 per cent of business in domestic sales and the rest 30 per cent is exports. Whereas, for GBTL, 60 per cent is export and 40 per cent is domestic sales.”

OCM, now with this amalgamation, is building up its export team. “We have hired a lot of designers. Exports will pick up in the US and European markets,” added Mahaldar.

R&D: The key to growth
“In today’s time, innovation is the key. If you are not innovating, you will not survive in the market. So, right throughout – from the development stage to the finished product, R&D is important; R&D on product, design and even on colours,” says Mahaldar. He added, “On the product front, we came out with acyclic shirtings three years back. This was the first time a worsted organised player entered into this field. It is a big hit in the country right now. We have done wool with various blends like silk, cotton and even man-made fibres. This is from the product point of view. On the design side, our designers do a lot of brainstorming and visit countries to check the global trends. Then they come out with creative designs, which are then QCed and approved.”

Importance of quality management
Speaking on the importance of quality, Yashpal Kalra, Head – Quality Assurance, said, “We are an ISO 9001:14001 certified company. This is not just in papers, we live by that principle. Right from designing to sales, every stage goes through a certain quality parameter. Every process has been standardised with an aim to bring out a standardised product every time.”

Added Kalra, “The in-house Quality Assurance Laboratory has successfully obtained accreditation from the National Accreditation Body for Testing and Calibration Laboratories (NABL) for fabric tests in accordance with international standard ISO/IEC 17025 : 2005 since 2015. It is indeed a matter of pride to be the first worsted suiting manufacturer in the country to have received the NABL accreditation. It has been awarded prestigious ISO 9001 certification.”

Changing scenarios of suitings
“In designs, earlier [around seven to eight years back] it was only about stripes. Then it moved to checks, but now it is still checks, but self structured checks is the new trend. Slowly it has started to move back to stripes. You can see a few celebrities have started wearing them. Right now, largely it is plain structures and subtle checks. We do identify stripes to come back soon,” says Mahaldar.

“On price point, the market is becoming challenging continuously, and that’s the reason why the wool business has stagnated. Last few years, the business has moved to cotton and poly-rayon globally. Products are not selling at the entire price range. They have to give 30-50 per cent discount to attract customers. That’s a challenge right now. But the good thing is that the luxury product segment is increasing. This segment doesn’t want ready-to-wear, they want customised fits,” he added.

Market for branded products
“India is a value conscious market and not a cost conscious one,” said Mahaldar. He adds, “In India, in general, 50 per cent of the population is from the younger generation, and even the disposable income is growing. People are becoming more brand conscious. Especially in our business, which is the made-to-stitch business, it’s increasing playing a role because the cost of living is increasing. If you see in today’s date, stitching a trouser takes only Rs 300 to Rs 400. The consumer psychology of paying more for fashion and and less for tailoring. The branded market has grown. In fact, the unbranded players led by Bhilwara are manufacturing and supplying to these brands, who are doing their own quality checks, doing their own design, colour trends. They are selling to this market. There has been a considerable growth across the country for these reasons.

On colour designs: Mahaldar says, “Typically, OCM is known as Oriental Carpet Manufacturers, but in various parts of the country, it is known as Original Colour Masters. This is because we have always given a huge variety of colours. We have more than 100 shades - from the lightest to the darkest – different blues, different maroons, greens, etc. OCM not only is giving conservative blacks, browns or greys, but it also provides shades across the spectrum. The latest colour palette that we have got from the US is the pastel colours. These colours are a shade lighter than our usual colours. Coming summer, those colours should be in India also.”

Wool for all season
Is wool only for winter? Mahaldar says, “Wool has higher absorbency rate of 30 per cent more than that of cotton. And therefore it can absorb more sweat. It is the most comfortable fibre to wear even in summers. The challenge is that it has scales. But if you go beyond a certain micron (19.5 or finer) the hairiness will not be there. This is general knowledge, but unfortunately there with only a limited number of people. People think wool means warm clothes. They don’t understand the difference between wool and worsted. Bringing awareness is important. Even Woolmark is doing a lot of good work on this front.”

Wool is for all climates, not just for wintry months. Even in the warmest climates, it is the ideal fabric for formal, travel and leisure. The aesthetic possibilities of a wool product are endless, resulting in a spectrum where wool could be seen as sheer and as fine as chiffon, or compact and waterproof that makes it perfect for outerwear. On the one hand, it’s insulating ability and comfort on the other. Not only does it keeps the wearer’s skin dry and clean, but also locks away odour releasing it upon washing. Since both water and heat can weaken wool and ruin its desirable properties, dry cleaning is a safe option for woollen garments.

Wool fibres can absorb large quantities of moisture, keeping the skin fresh and dry for a longer time. It acts as a buffer to reduce peak humidity levels and makes those hot summer months more comfortable.

On OCM’s role in changing consumers mindset, the CMD says, “We are inviting salesmen across the country to our Amritsar plant and are telling them about the importance of wool and its properties. Education is important, and we are doing it with our marketing campaigns and through training programmes.”

Expansion and performance
Speaking on the performance of OCM in 2018 and plans for 2019, Mahaladar says, “In this year, post amalgamation of two brands, especially after the advertisement campaign, we had 20 per cent growth in our domestic business as compared to the last year. Next year, it is going to be even better as we are targeting around 20 to 25 per cent growth. The reason is simple: better product, better sales efforts and also weaker competition. There were only five to six players in the competition before, but all of a sudden there are only two players left. Because of this, we are witnessing good growth. Our sales order is complete for the December period. The order we are getting now is for January 2019. We couldn’t satisfy a lot of orders because of our capacity.”

On capacity expansion: the CMD says, “We are planning to upgrade our machines to offer better product. We are planning for expansion of combers in spinning, and we are planning to upgrade our autoconers for better quality of yarn. We are also planning to have more high-speed machines for weaving so that we can better output. We are also upgrading our finishing line. Different plans for primarily for upgradation of machines and then minor increase in capacity. Right now, increase in capacity in worsted business is not the industry is currently looking at. We are looking at consolidation because our business was stagnated. The idea is to first capture the market, then consolidate and then utitlise the full capacities—which we have been doing for the past few months—for a year or 1.5 years, and then think about capacity expansion. Minor expansions and upgrading our quality is what we are doing right now.”

Grado and beyond
“Grado is going to come up with various things and the current campaign is going to be there for some time now. One cannot build a brand in three to four months. The momentum is going to continue. We came out with a campaign in which we will announce our winners shortly. Around 50 winners will get a chance to meet Mr Bachchan. We just came out with a gifting commercial. It is one of the best commercials I’ve seen in a long time. We are expecting good business in November and December season, which is the wedding season in India, says Mahaldar.

He added, “Introduction of cotton is another big step at OCM. There are big things lined up for at least next 3-4 months.”

Mahaldar concludes: “We are also targeting women through our new product launches. We will share more details on this after two-three months. We are targeting them in a big way. Increasingly, women are going to the workplace and therefore womenwear will have huge demand. That’s the reason Lycra and spandex products are coming up in a big way. Therefore, any innovation you do now, Lycra and spandex fibres are going to a play a crucial role. In denims too, you can see almost 100 per cent of the product have moved to stretched denims. Also, we are planning to come out with unique blends. There will be a full-fledged advertisement campaign for that very soon.”

- KARTHIK MUTHUVEERAN

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