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Denim rides again

Surajeet Das Gupta and Arti Sharma with Joydeep Ray

It is a company that is coming back into fashion in a big way. For three years Sanjay Lalbhai's Arvind Mills has been deep in the red and its balance sheet in tatters. Now, its over 100 million metre per annum denim unit is booked solid for the next two months.

What's more, it has stitched up long-term supply contracts with international fashion majors like Gap, Tommy Hilfiger Wrangler and Levis that will keep it busy throughout the year.

At Mafatlal-Burlington Industries a search has begun for ways to double the company's denim-producing capacity.

The joint venture between the Mafatlals and Burlington already produces 10 million metres annually and its order books are chock-a-block till December. The company is scouting for a new denim mill in a country where costs are low. Or it may expand in India.

Take a walk along any high street in Europe and it's easy to understand why companies like Arvind Mills and Mafatlal-Burlington are struggling to keep up with the order books.

Denim is suddenly the flavour again in the 21st century. What's more, this time it isn't coming back only in the indigo blue that we know so well. It is being mixed with new age fabrics like Lycra and Tencel and being turned into high fashion garments.

The ripples from the world of international fashion are being felt in a brace of Indian companies that pinned their faith on denim staying in style.

Take Raymonds, which wants to double capacity to 20 million metres. Says Akshay Singhania, director, Raymonds: "Currently we are utilising above 100 per cent of our capacity. In 1997, we were at 70 per cent utilisation levels."

Could this be a one-season wonder? Will denims soar to the top of the fashion charts and then be dumped at the back of the cupboard once again? It is possible but this fashion turnaround is likely to last longer.

Denim has returned on the seat of technological advances that have made it almost unrecognisable from the old indigo denim that we all know and love.

Now, there are lightweight fabrics that have an entirely new feel and look. Denim is also coming out of the mills in thousands of varieties like ring denim, slub denim or even denim with T400 that can withstand bleaching and also, incidentally, reduces perspiration levels.

Alternatively, denim has been teamed with fabrics like Lycra to make high-stretch garments that have become extremely popular with European women.

The result is that companies like Arvind Mills now turn out an incredible 800 different denim products compared to only 10 that they used to produce in 1996-97.

In any given month it launches around 150 different denim styles to cater to a growing but discerning fashion market. Similarly, Raymonds turns out over 30 varieties of denims for its diverse range of clients every month.

India is well poised to take advantage of this fashion turnaround. Leading Indian denim mills like Arvind, K G Denim, Ashima Textiles and Mafatlal-Burlington together have a capacity to produce over 250 million metres of denim.

Out of that, over 50 million metres is sold to domestic manufacturers and another 30 million metres goes to Indian exporters, which are chock-a-block with orders from both international and domestic buyers.

What's more, the Indian mills have been moving ahead of the fashion curve. They were among the early ones to start making differentiated, higher value denims.

Mafatlal-Burlington, for instance, has performed a complete turnaround in the last five years. In 1997, only 20 per cent of its products were differentiated denim. Now that has climbed to 75 per cent.

For the Indian mills the denim comeback has not come a moment too soon. Demand for denim was ripped to shreds between 1995-2000 and mills like Arvind were left with huge unutilised capacities. Now a company like Raymonds says that demand is growing at a respectable 5 per cent to 6 per cent annually.

That's not all. Take a look at Arvind Mills. Price realisation in Arvind Mills has climbed a staggering 22 per cent due to growing demand.

Says Milind Hardikar, head, denim business division, Arvind Mills: "Over the past two years, we have seen a 20 per cent to 25 per cent increase in our average prices through a combination of price hikes and enrichment of the product mix."

The denim comeback has given Arvind a stronger bottom line than at any time in the last five years. Arvind has posted a first quarter net profit of Rs 100.5 million. That's compared to a staggering loss of Rs 962.9 million last year.

Of course, a financial restructuring has also helped to make the bottom line look healthier (the company's share has risen from a rock-bottom Rs 7 a few months ago to around Rs 22.25 currently).

Arvind isn't the only denim-clad winner. Ashima Textiles has hiked average prices by around 15 per cent from $1.6 per metre three years ago to $2 a metre. Falling cotton prices have also helped the company's bottom line.

Says Chintan Parikh, chairman, Ashima Textiles: "Margins have actually gone up by 30 per cent compared to two years or three years ago. This is because of the reduction in raw cotton prices, the increase in fabric prices due to increased demand and also the depreciation of the rupee to the dollar."

Denim has become the fabric of dreams once again and not only for the big mill-owners. It has altered the outlook for apparel makers and - as Indians follow international trends -- forced retail stores to stack their shelves high with denim-based products.

Madura Garments, for instance, is filling a gap in its wardrobe by entering the ready-to-wear denim market with its San Francisco brand. The company, one of the country's largest apparel manufacturers, was conspicuous by its absence in this segment.

Says Prakash Nedungadi, president, Madura Garments: "We think the time is ripe for us to enter this sector this year and leverage our distribution reach."

To meet the anticipated domestic demand Indus Clothing, which owns the Lee Cooper brand in India, is also boosting denim production by 50 per cent.

Says Harpratap Singh, managing director, Indus: "We are seeing a shift in the ratio between denims and non-denims more favourably towards denims this year." And Mumbai-based Pepe Jeans has seen sales grow by 30 per cent.

The retailers have also spotted the emerging trends. At retail chain Westside denim sales doubled this season. What's more, the company has introduced cheaper denim products under its own label to cater to growing demand.

Similarly, the retail chain Ebony has seen denim sales go up by over 35 per cent in April-June over the same period last year.

Says Birinder Singh Narula, managing director, Ebony: "Earlier we used to keep four brands of denims; now we keep eight brands apart from our own brand which we introduced some time ago."

Why have denims staged a head-to-toe comeback? In the late '90s, newer fashion statements like chinos and khakis replaced denim. As a result Indian mills were saddled with huge capacities and prices fell by as much as 15 per cent to 20 per cent.

But by end-2000, the fashion cycle made a complete about turn. Says R S Roy, editor, Images, a fashion and retailing magazine: "Fashion is a cyclical process and for the last few seasons it has been clear that denims are back. But heavyweight indigo denim is now passé and a whole host of differential denims are in."

Indian denim producers are pulling out all the stops to ensure that they stay in front. Some like Ashima and Arvind have tied the knot with specialised fibre producers like the UK-based Accordis group, which makes Tencel.

Accordis showcases products from Indian mills in its own showrooms and is helping Ashima execute an order for department chain Marks & Spencer.

Similarly, US major DuPont, which owns the Lycra fibre, has tied up with Arvind Mills as a "Lycra Assured Partner" under which it offers preferential treatment on technology.

Fashion can be a fickle master and everyone is already asking how long the denim boom will last. The optimists predict that the large number of new offerings will keep it going for anywhere between three and five years.

But others believe the fabric of the boom could get frayed quickly. Back in 1995, everyone believed that denim was not a cyclical product. The mill-owners who invested heavily in it were proved expensively wrong. This time - like a man who turns up at a black tie affair wearing jeans and a t-shirt - nobody wants to be caught turning out the wrong fabric at an inopportune moment.

The red hot blues

Once there were blue jeans and blue jeans and blue jeans. But denim is much more than blue jeans these days. Says Darshan Mehta, president, Arvind Brands: "Denim has become much more fashionable. It is becoming a fashion statement rather than a product that was earlier meant for comfort and ruggedness only."

Here is a primer on what's hot in the denim world:

• Lightweights are in and heavy, rugged looks are on their way out. In the '90s, most denim fabric weighed in at around 14.5 ounces. Today, the new lightweights are more likely to be between 8 ounces to 12.75 ounces;
• Lycra has been teamed with denim to make body-hugging, stretch jeans that are popular with women. DuPont, which developed Lycra, is working with mills and fashion designers to offer customers a range of products;
• DuPont has also developed T400 which, when mixed with denim, can withstand chlorine bleaching and is said to reduce perspiration;
• Tencel-based denim gives a softer feel and is comfortable to wear. The fabric is offered in various combinations like 70 per cent cotton and 30 per cent Tencel. It is also used for shirting material;
• K G Denims has introduced viscose staple fibre-based denims that have 80 per cent cotton content and 20 per cent VSF, which also makes for more wearing comfort;
• Ring denim is made from uneven yarn and is popular with brands like Levi, A&F, Nautica, etc;
• The old world look is also in vogue once again. For instance, Wrangler has introduced the 10-year-old look were the trousers are hand processed to produce a worn look.