The year was 1994. Sunder 'Ashok' Genomal was visiting Bangalore for the first time to spend time with his sister who had moved to the city. There was another reason for his visit to India. Sunder was scouting for growth opportunities in the country, which had opened up three years earlier. He was encouraged in this quest by Jockey, the global innerwear and loungewear company, headquartered in Wisconsin, US. Jockey wanted a presence in India and saw the Genomals as a potential partner.
But first, a flashback. The Genomals have roots in Mumbai and Sindh province of Pakistan, but Sunder was born and brought up in Manila. He still retains citizenship of Philippines, though he has worked in several countries - across Africa, in UK and now India. Four generations of his family trace their success to a grand uncle who had moved to Philippines in 1889 to take advantage of trading opportunities.
BEST CEO TEXTILES: PAGE INDUSTRIES LTD
- INCOME/ 3-YR CAGR: Rs 1,552 crore/ 30 per cent
- OP. PROFIT/ 3-YR CAGR: Rs 320 crore/ 29 per cent
- PAT/ 3-YR CAGR: Rs 196 crore/ 30 per cent
- AVG MCAP/ 3-YR CAGR: Rs 9,980 crore/ 58 per cent
- AVG MCAP (APR-SEPT 2015)/YOY GROWTH: 107 per cent
- ROE/ ROCE: 58.0 per cent/ 62.4 per cent
- CASH/DEBT: Rs 4 crore/ 157 crore
- NET PROFIT MARGIN: 12.70 per cent
In Philippines, while they dabbled in many industries, it was Genomal's alliance with Jockey that hit pay dirt. From being mere distributors initially, the Genomals have become trusted partners of Jockey all across Asia, becoming billionaires in the process.
Manila to Bangalore
Jockey had been approached by a few large Indian business houses to license their brand. But the long association of the Genomal family with Jockey in South East Asia meant that the first right of refusal went to them. The Genomal brothers decided to grab the opportunity, though they had not lived or done business in India. Next came the question of choosing a base for headquarters in India; it was a tossup between Mumbai and Bangalore.
"Even as I weighed the relative merits in my mind, it was finally the lovely Bangalore weather which proved to be the clincher," avers Sunder, with a smile. Also, maybe the fact that, before Bangalore become synonymous with the IT boom, the city's largest employer was the textile industry had a role to play in the decision.
Yeh, andar ki baat hai
Till the advent of the Jockey brand in India, innerwear - briefs and vests for men; panties and bras for women - were a push-business where the retail touch point played a key influencing role. "Till we entered the market, if you went to buy innerwear, the salesperson would pull out something encased in some poor plastic wrap. Innerwear was sometimes hidden away. There was no display, there was no brand pull and quality was abysmal."
This was paradoxical as India is one of the largest textile exporters in the world. Clusters like Tirupur in Tamil Nadu are famed for their prowess in hosiery and knitwear exports including vests called 'banians' in local parlance. There were a plethora of home-grown brands in the domestic market including the likes of VIP, Rupa, Lux, Tantex and Temple. How then did Jockey crack the Indian market?
1994: Page Industries starts its Indian operations
1998: Company becomes profitable
2005: Wins Best Licensee award from Jockey International
2007: Page is listed on Indian bourses
2011: Page licenses Speedo Swimwear from Pentland Group
2015: The company launches its own online store
Sunder says Page Industries' (as Jockey India is called) success was a result of obsessive attention to quality and detail. "I grew up on the Jockey brand and, even as a kid, spent time at the manufacturing plant set up by my father as early as 1959, in Manila. It is still operational today." The first thing Genomals decided was that nothing would be outsourced. "To get the kind of quality standards required by Jockey, we had to have control over every step of the manufacturing process. Even today, more than 95 per cent of all products we sell in India are manufactured in-house. Only a small portion comprising mainly thermal wear is outsourced. But even there, the third party facilities are dedicated to us and we control quality," adds Sunder.
Despite such attention to detail, Page Industries suffered losses for the first two years of its existence. The name Page came from a portmanteau of his mother's name Parpati Genomal. The losses were due to the fact that Jockey was positioned at the premium end of the market and it was yet to get its retail act together. Page didn't want its products displayed and sold the way innerwear was being sold in the mid 1990s in India.
Sunder's biggest fear was that retailers in India may not showcase, market and sell their products in the manner Page wanted them to. "Before the launch, we actually invited at least 100 of the top retailers in seven cities and presented our products, display materials, POS and plans. The response was overwhelming; almost like a stampede. Retailers actually rushed to queue and sign up. Even outlets which rarely carried innerwear, rushed to join. When I witnessed this, I knew right away that our future was made," he says.
Slowly, but surely, Jockey became an aspirational brand, and as middle-class incomes grew, an affordable one. That is where Page's strategy of focusing on quality, generating brand pull and creating a new paradigm in innerwear display and retailing paid off. Sunder recalls that the then President of Jockey International, Rick Hosley, predicted that "you guys will one day become the biggest licensee of Jockey in the world," a milestone it crossed several years back.
Page recognised the potential at the premium end of the inner-wear market early, according to R. Sivaram, MD of Royal Classic Group which sells its apparel under the Classic Polo brand and is headquartered in Tiruppur, Tamil Nadu. "A large number of Indian knitwear and hosiery exporters just focused on tapping the volume opportunities in international markets and never looked at building a brand in the Indian market," he says. "Jockeys emphasis on quality and controlling the retail experience on how it sells and markets its product has created a certain brand image for itself. Most other players like Rupa, Dollar, Lux and others are, even today, mostly present in the mid-end of the market. Only Tommy Hilfiger gives Jockey a semblance of competition in the top end of the market," adds Sivaram.
Tapping the IPO Market
A dozen years after entering the Indian market, Page decided to raise money from the markets in 2007. Sceptics pointed out that Page was 'just a licensee of Jockey brand' and it operated in the premium end of the innerwear market. "We could have just borrowed from banks and financial institutions, apart from internal accruals, to continue our growth story as we had become profitable since the very third year of our existence. However, we chose to tap the markets, not just for the funds but also for the financial discipline a listing brings. It keeps everybody on their toes," informs Sunder.
For those who invested in Page at the IPO price of Rs 360 have been handsomely rewarded. A one lakh rupee investment at the IPO price would eight years later yield approximately Rs 36 lakh, not taking into account the regular dividends paid by the company. In 2008, Page renewed its licensing arrangements for the Jockey brand for 50 more years, till 2058, and 'thereafter to be continued in perpetuity every 50 years'.The innerwear market alone in India is estimated at $4 billion (approximately Rs 26,400 crore) and is a part of the overall $120 billion textiles market. Page Industries, as of March 31, 2015, had revenues of Rs 1,543 crore and a net profit of Rs 196 crore. "We believe changing demographics will continue to work in favour of consumption-oriented companies like Page Industries. The company will be a beneficiary of the shift from unbranded to branded products. Currently, Page's exports are negligible and the company will be able to explore export opportunities as and when domestic demand begins to dry up. The stock has also faced some concerns that the company will need to resort to debt in order to be able to maintain its current dividend payout and capex requirements," says ICICIdirect, in a report on Page Industries released in November.
Genomal says that while Page has a presence today in men's, women's and children's innerwear, apart from other categories such as loungewear and socks, they have barely scratched the full market potential. Apart from this, it also licenses the Speedo brand of swimwear. 'This is just the beginning of our growth story. The best days of Jockey in India are ahead of it.'
Page, today, has 223 exclusive Jockey outlets, and is available in 726 large format stores and 35,000 retail outlets across 1,200 cities and towns of India. It also has the licenses for manufacturing and distributing Jockey in Middle East, Asia, Sri Lanka and Nepal. In UAE, for instance, it has already opened up four exclusive stores and has presence in 40 other multi-brand outlets (MBOs). In Sri Lanka, it has one exclusive outlet and distributes through 65 MBOs. "Page Industries, through Jockey, has built an enviable premium brand positioning for itself, and the management deserves full kudos for it," says Sivaram.
In India, Page has 11 manufacturing facilities where it employs more than 18,000 people. Sunder Genomal, who at 61 still likes to play basketball competitively, says spending time with employees on the factory floor is what keeps him going. Sunder also likes to strum the guitar at charity events. While brothers Nari and Ramesh are on the board, Sunder's son Shamir is clearly being groomed to take over the top job eventually. A leading business publication (Forbes) recently listed the Genomals as India's 95th richest with a net worth of $1.2 billion, courtesy their 51 per cent holding in Page.
After years of spectacular growth, Page might also face tougher competition with a number of other international brands such as Levi's, Fruit of the Loom, Hanes and others making their presence felt in India. Clearly, Sunder Genomal will have his hands full keeping Page Industries ahead of the growing competition as he dribbles and strums his way to success.