Sarju In­ter­na­tional: Re­builds busi­ness, post downslide When the go­ing gets tough, the tough get go­ing!

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90 per cent of the prob­lems we face are re­lated to fab­ric. All stake­hold­ers of the in­dus­try need to sit to­gether and see how we can prob­a­bly in­vest more in pro­cess­ing. If we have good and enough process houses in In­dia, we can bring down the cost and this can be a key to suc­cess.

When the go­ing gets tough, the tough get go­ing! It is al­ways very hard for any ap­parel ex­porter to re­build him­self af­ter ma­jor losses, how­ever, some com­pa­nies have achieved this ‘im­pos­si­ble’ with their sheer pa­tience, hard work and well-for­mu­lated strate­gies which bring in re­sults. A per­fect ex­am­ple of the same is Mum­bai-based Sarju In­ter­na­tional. Af­ter a long strug­gle of more than 4 years, the com­pany is grow­ing at the rate of 15 to 20 per cent from last 3 years. Ap­parel On­line met Amit Goyal, MD of the com­pany and dis­cussed the ups and downs of his 27-year old or­ga­ni­za­tion. Wrong tim­ing of some crit­i­cal de­ci­sions were the main rea­sons for its fail­ure; while cost-cut­ting and lim­it­ing or fo­cus­ing it­self on core is­sues were the sig­nif­i­cant routes which it took to come out of the sit­u­a­tion.

In June 2006, Sarju In­ter­na­tional (do­ing a timely an­nual busi­ness of nearly Rs. 28 crore) ac­quired US de­signer brand Nick Hil­ton and one of the top out­wear man­u­fac­tur­ing com­pany Gor­don & Fer­gu­son for

Rs. 7.5 crore and Rs. 34 crore re­spec­tively with an an­tic­i­pa­tion of con­sid­er­able growth. Some other ag­gres­sive ini­tia­tives like go­ing for an IPO, ac­quir­ing a brand and col­lab­o­rat­ing with a Euro­pean com­pany… were also in its pipe­line. A Red her­ring prospec­tus by the com­pany got clear­ance from SEBI but the plan was aban­doned. Re­call­ing those days, Amit thought­fully briefs, “Re­gard­ing de­signer Nick Hil­ton, the idea was to launch mens’ suits in Amer­ica for few years and then bring this con­cept to In­dia and open re­tail stores. While for Gor­don & Fer­gu­son, we were plan­ning to con­trol the front-end and sup­ply from here.” But over­all things started chang­ing and global re­ces­sion of 2008 forced Sarju In­ter­na­tional to wind up all these. “Tim­ing was not in our favour as we took these steps at the wrong time. Within 9 months of buy­ing Gor­don & Fer­gu­son, it filed for bankruptcy. We lost lot of money due to which we strug­gled a lot from 2008 to 2012/2013,” adds Amit.

As an af­ter-ef­fect of all these prob­lems, the com­pany sold its Tirupur’s man­u­fac­tur­ing unit in 2012 and started work­ing as a mer­chant ex­porter. “By not hav­ing our own man­u­fac­tur­ing, we were able to fo­cus more on mar­ket­ing rather than pro­duc­tion and al­lied is­sues. By out­sourc­ing, prod­uct cost in­creases al­most 10 per cent but it gives us flex­i­bil­ity, like when there is a lean pe­riod, I don’t have any over­head cost. I found this model works for us very well and we are happy with this de­ci­sion,” says Amit. He fur­ther added that to cut down the cost, two other ma­jor steps were taken. Ear­lier its Mum­bai of­fice which was of 10,000 sq. feet was changed and shifted to 2,500 sq. feet of­fice. Its of­fi­cial work­force of nearly 45 persons was also brought down to half. These ma­jor changes helped the com­pany to be­come more com­pet­i­tive, to grab more or­ders and re­tain the old buy­ers. “It was very dif­fi­cult for us like be­ing the ones who are used to travel in busi­ness class, we were forced to travel in econ­omy class. But now we are used to it and are do­ing well,” states Amit and goes on to em­pha­size, “When busi­ness is good, one can em­ploy more peo­ple, but when one starts cut­ting down the flab, one can do more work with less peo­ple. Now at ev­ery step, we keep our­selves very much lean.”

The com­pany, ma­jorly do­ing poplin shirts for men and kidswear (30 per cent of to­tal busi­ness), is work­ing on a strat­egy which gives it max­i­mum gain from min­i­mum ef­forts, like it is not in­vest­ing to ex­plore new buy­ers, new mar­kets and is work­ing with such kinds of im­porters, buy­ers who don’t in­sist on com­pli­ance, au­dits, but just fo­cus on main­tain­ing the law of the land. Cur­rently some of the buy­ers of Sarju In­ter­na­tional are do­ing an an­nual turnover of US $ 500 mil­lion or even 800 mil­lion but they are buy­ing just 3 to 5 per cent of their to­tal re­quire­ments from the com­pany. “I have lot of growth op­por­tu­ni­ties to de­velop along with

the same cus­tomers and the same hap­pened in the last 2-3 years. As we are grow­ing well, it means that we are grow­ing with these cus­tomers. So why should I run to a new coun­try or new mar­ket when I see enough po­ten­tial in the same cus­tomers? If we ex­haust or reach a cer­tain level with our buy­ers… only then we will look for new buy­ers,” rea­sons Amit. The com­pany is work­ing 90 per cent with US-based buy­ers and rest with Latin Amer­i­can buy­ers who have average or­ders of 5,000 pieces and max­i­mum up to 30,000 pieces. This gives a com­fort­able level to Sarju In­ter­na­tional and it doesn’t take or­ders of more than 30,000 pieces.

All these ups and downs have not lim­ited the com­pany from ini­ti­at­ing fur­ther but it will take time as a con­fi­dent Amit stresses: “We are grow­ing at 15-20 per cent ev­ery year and we will be in this po­si­tion for the next 2-3 years where we want to sta­bi­lize. Af­ter that we will de­cide about ‘what next’, be it back­ward in­te­gra­tion or open­ing a de­sign stu­dio. Many things are in mind but noth­ing is con­crete cur­rently,” con­cludes Amit with a fu­tur­is­tic vision.

Amit Goyal, MD, Sarju In­ter­na­tional

Sarju In­ter­na­tional is do­ing mainly poplin shirts for men

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