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‘Lilliput’ could well be a misnomer. For, there’s nothing small about a Rs 260-crore kids’ apparel empire that spans the country and has inched overseas. Or perhaps there is. It is, after all, a clothes line for children. And it germinated as a small enough idea. Lilliput’s long journey has been a series of baby steps that began 22 years ago.
In 1986, Sanjeev Narula, the then 21-year-old graduate, took up a job in an export house in Delhi as an assistant executive on a monthly salary of Rs 850. He had no great ambition and envisioned himself as a manager a few years down the line. But four years of handling all aspects of export merchandise—liaisoning with exporters, tailors and customs officers and doing inventory management—and boredom began to creep in. “I had to stop going around in circles if I wanted to move ahead,” says the managing director of Lilliput. Ambition had taken root. It was time to move on.
Narula set up a small unit with 25 sewing machines in Delhi’s Govindpuri area, in 1990. He employed four people and hired tailors on contract to take up fabrication work for exporters. It required an investment of Rs 1 lakh which came from his own savings and as a loan from his father. Through his contacts in the previous job Narula managed to get some work, but the returns were very low. “Handling tailors, working on debits and battling the constant cash flow problems was very frustrating,” he says. However, his father, a bank officer, supported him through it all. “I was not married and my father had a steady job, so I could take risk,” he says.
A year later, Narula decided to approach middlemen to help secure direct export orders. Luck favoured him and he got a small order of 500 blouses from a Spanish company. “Each piece was carefully tailored and the consignment was highly appreciated,” he says. So the firm placed another order of 4,000 kids’ garments. This helped Narula close 1990-91 with a turnover of Rs 8 lakh and it proved to be the turning point. “For the first time I saw the immense potential in this field,” he says. It was around this time that India also liberalised its export policy and Narula moved to make the most of the booming industry.
He rented a small factory in the Okhla Industrial Area, Delhi, to execute larger orders and focused on value addition. “I’d study catalogues and create more samples than were required. This helped me curry favour with the exporters who liked the improvisations,” he says. It helped him develop a regular clientele. Having ensured a continuous inflow of business, Narula increased his staff strength to 25. “It is important to have good workers. There was no need for senior managers as I was getting business and managing the workers,” he says.
Hard work paid off and in 1992-93 he registered a turnover of around Rs 1 crore. This buoyed him to take a loan to buy imported machinery. “Investing money back into the business is the surest way to grow,” he advises.
For the next seven years, Narula’s focus on building exports helped the firm double its turnover every second year. But the dream run came to a halt in 2001. “We had overbooked in some cases and fell short,” says Narula. Before he could resolve the problem, 9/11 led to the cancellation of orders. The over-dependence on exports showed in the balance sheet and the company posted a loss of Rs 4 crore in 2002-3. This forced Narula to rethink his business plan.
Tips for starting a garment manufacturing firm• It’s a capital-intensive business, so be prepared to start with a Rs 25 lakh investment • If you plan to start small, continue to upscale frequently for the business to grow profitably • Before starting, you must understand all the functions, from a tailor’s job to the retailer’s • To succeed, you have to be passionate about the business |
As most orders had been from companies retailing in kids’ wear, it had by default become Narula’s expertise. So he conducted a survey and decided to retail the same in the Indian market. “We found there was a vacuum in branded garments for kids. The ones that were available were either expensive or tacky,” he says. His confidence also stemmed from the fact that his team of designers had mastered the art of creating classy cuts in cotton fabric. Narula zeroed in on Delhi’s posh Greater Kailash market for his first store, which opened in 2002. Brand Lilliput was finally born.
The response was astounding. “I created a concrete business plan with a very aggressive growth strategy,” says Narula. However, he did not take the franchising route to grow. “I don’t believe in franchisees in India. It’s not good for a company’s brand value,” he says. Instead, he booked shops in upcoming malls all over the country. He also signed a revenue-sharing agreement with shopowners at other locations. “The management had to be ours,” he says. In four years, the number of stores across the country mushroomed to 145.
However, the aggressive marketing plan for domestic market was not backed by an equally strong supply chain. With the growth in operations it became important for the company to shift to a robust system as the management was unable to get critical reports from individual stores. “We fumbled on logistics, the replenishment of stocks was delayed and there was no centralised data system,” says Narula, who spent 2006-7 upgrading the system to keep up with the rising demand.
On the export front, business was picking up slowly. With regular clients in renowned brands like Gap and Next, Narula did not have to scout for more orders. And as business in the domestic market was under control, he ventured abroad. “I understood the market mechanism quite well,” he says. He opened a store in Bahrain in 2007, another in China in 2008 and his “first franchise store in Cairo in June”. Narula has lined up an ambitious plan of opening 50 stores in the Middle East and 100 stores in China by 2010-11. “We’ll have 250 exclusive stores in India by year-end,” says Narula, who ensures both his kids sport the Lilliput brand.
From 25 sewing machines in a dingy workshop to eight manufacturing units in Delhi and NCR with over 3,000 state-of-the-art machines producing six lakh units a month, Narula’s success is complete. He pegs it to diligence. “There is no alternative to hard work,” he says.
