Shift to branded wear is benefiting TCNS, says Anant Kumar Daga

Contemporary ethnic wear firm TCNS Clothing Co has come a long way with its Indo-western / women’s apparel brand W over the last decade. In fact, the company has made two additions in the form of Aurelia (ethnic wear) and Wishful (premium apparels) to it portfolio thus expanding its offerings in the market. Anant Kumar Daga, MD, TCNS Clothing Co Ltd, in conversation with Ashish K Tiwari, speaks about the women’s apparel market, competition.

Could you give us an overview of the market?

Overall the market size of the Indian apparel industry is around $50 billion out of which women’s wear comprises $19 billion i.e. just 38-39% of the market share. Of this $19 billion, approximately $13 billion comprises of Indian wear including sarees and salwar kameez, dupatta (SKD) in equal proportions. The market for branded ethnic wear is around $1.5 billion and that’s the space we operate in. Two key developments have happened in the last decade in the women’s wear category. One is that customers wearing saree are gradually shifting to SKDs. Secondly, there is a shift from unbranded to branded wear, which is benefiting our segment, in particular, leading to a fast growth rate.

Is competitive intensity high in women’s wear?

Not really. In fact, there are no foreign players in Indian ethnic segment if you look at it from the competition point of view. Also, there are very few national players like Biba, Globus and Fabindia in women’s apparel section. There definitely are a few regional players and private labels but they are constrained to their region of operations owing to distribution challenges. We believe this is a very good segment for branded players like us. In fact, the business potential is only headed north in the coming years.

Cotton and yarn prices have escalated by 20-25% in last few quarters and now there is a considerable increase in the minimum support price (MSP). Will it impact costs?

In our product range, we use a variety of fabrics. Also, most of our styles inter-changeably use different fabrics. So it is not that we are completely dependent on cotton fabric alone. Cotton is one part of our range. Also, we have a fashion product, unlike standard products. We are able to manage our cost. So, for companies like us are not significantly impacted by fluctuations in cotton prices.

What are your plans post the IPO?

The IPO will not only give us huge visibility in the Indian consumer business space but also enhance our ability to attract and retain talent. It will also increase our ability to get partners and traction for our brands. All this will increase manifold post the IPO. We think that the market is very big and hence the opportunities are also very large. In the future, if there is a need to tap market then this is a huge opportunity.

How does the fundraising horizon look like?

We don’t have a specific horizon as such. Our business is based on a very capital effective model. We are a debt-free company with enough cash on our balance sheet. Our business generates enough cash to fund expansion. Capex requirement are also met through internal accruals. So, we don’t see any such funding requirement.

Would you be expanding your international presence?

We will look at all the markets with Indian diaspora in addition to seasonality factor that supports our products. We will definitely expand with own stores in all such markets. Geographies such as the Gulf Cooperation Council and the Middle East are important markets to us. In fact, we are exploring possible options there.