In 2011, an enthusiastic young man combined his passion for fashion with business and started Roman Island. Six years later, this Rs.100 crore company is making its presence felt both in the domestic and international markets. CEO and Chairman Charan Reddy Arutla shares the company’s growth, challenges and plans with The Dollar Business

CHARAN REDDY ARUTLA
CEO & Chairman,
KRD EXPORTS PVT. LTD.


TDB: Apparel exports looks like an unattractive business because of the severe competition in today’s world. What attracted you to the business?

Charan Reddy Arutla (CRA):  I have always been passionate about apparel and shopping – usually, I spend a lot of time and money on shopping. Slowly, the idea of starting a manufacturing business and selling apparel struck me. I was then 20 years when I combined all the forces that were willing to back me to take this new step. And with my bachelor degree in business administration in hand, I kick started Roman Island in 2011.

TDB: Roman Island has 85 exclusive stores across the country and has recently started selling through online platforms. What does your experience say about the market environment?

CRA: Yes, we cater to customers through both physical and online retail stores. Well, when we talk about the market size of the apparel industry in India, the behaviour of consumers has drastically changed over the last few years. The consumers’ needs and demands have also grown, and now we are in an era where people like to be up-to-the-date with fashion.

We all know that the demand for Roti, Kapda and Makaan (bread, clothes and housing) will never cease. The demand has, in fact, been increasing with the change in taste, backed by growing purchasing power.

Speaking of both physical and online retail stores, they offer different shopping experiences. For instance, a physical store offers prospective customers the opportunity to touch and feel the product, or even try the fittings of the product immediately.

However, in online retailing, it is the photographs of the garments that can either attract or repel a customer, which is both an advantage and a disadvantage compared to a physical store. And this difference is reflected in the sales number. For us, only about 12-15% of our revenue comes from online sales.

TDB: What kind of growth do you expect in the next five years?

CRA: We started our business in 2011, with a capital of Rs.50 lakhs. And within a short period, the company’s worth has reached nearly Rs.100 crore.
Our target for the next five years is ambitious, as we plan to become a Rs.500 crore company.

TDB: Now speaking of markets beyond the Indian subcontinent, exports contributes around 25% to the company’s revenue. What are your main markets? Do you have plans to strengthen the exports segment?

CRA: We have two international offices, one in Dubai (UAE) and the other in Zanzibar (Tanzania). At the moment, our focus markets outside of India revolves around East Africa, Middle East and Europe. However, we are working on ways to cater to markets such as Canada, Australia, Central and the western Africa. We believe, these are unexplored markets with a lot of potential because demand there is higher than supply.

TDB: Also, could share with The Dollar Business your first exports experience? Was it easy to land your first order?

CRA: Our first export experience was quite an intriguing one! We were so passionate about exporting our products that we actually shipped a consignment to Dubai even though we did not have any order in hand. We kept the consignment at Jebel Ali Port (Dubai) and then started looking for buyers. Fortunately, it did not take us long to find buyers, which boosted my confidence. Well, I was also impressed by the volume game involved in export. And since then, I decided to start concentrating on exports.

TDB: As an exporter, what kinds of challenges do you face? Have you been able to find a way to counter them?

CRA: When we talk about fashion, every country has its own unique trend – be it styles, preference, measurement requirements, etc. These can prove to be a major challenge because we need to cater to each market in its own unique way. Another challenge is the huge competition from China and Bangladesh.

And sadly, the competition from them is eating into our margins. But we have learnt our lesson! We have found that one way of earning a higher margin is to explore untapped markets – they have proved to be less competitive. And as mentioned earlier, Africa is what we have on our mind – going forward.

TDB: Leaving aside competition from countries like China and Bangladesh, this is a very competitive sector even in India. How important is R&D for Roman Island?

CRA: Well, it is true that this is a very competitive sector not only in India but across the globe. So, when competition plays a significant role in shaping your business and margins, naturally, the role of Research and Development (R&D) increases.

To survive and to grow in this business, we need to be innovative, creative and fashionable. Otherwise, if you are slow to react to competition from other brands, your brand will die and you will be out of busines sooner than expected.

We have thus created a strong in-house designing team, led by Mr Arvind, who is efficiently supported by our talented and competent sampling team and masters. I also regularly travel to different countries to learn more about their culture and fashion and factors that impact the fashion there.

Also, attending trade fairs and fashion shows and collecting samples help us develop new ideas to offer better choices and selections to our customers.
 
TDB: Where do you source your raw material from? Is everything sourced from India or do you also import?

CRA: Well, we buy most of our raw materials from well-known mills from across the country. But, yes, there are times we have to import fabrics and accessory trims from China because some of them are either not available in India or their quality isn’t as good as those sourced from China.

TDB: Currently, the company focusses only on men’s apparel. Do you have plans to venture into women’s apparels going forward?

CRA: Our brand, Roman Island, is known for its men’s fashion collection. And even in the future, we would prefer to continue to focus on men’s clothing as we have already developed a niche in this segment. But I must tell you that we have recently purchased a leather factory and have started manufacturing leather products like footwear, belts, wallets and other accessories under the Roman Island label.