They have had a great year in the domestic market and are now eyeing the global market. In keeping with their mission value of being clothier to the nation as well as the world, S Kumar’s Nationwide Ltd (SKNL) announced its plans to start a subsidiary in The Netherlands recently. Managing Director and CEO Nitin Kasliwal tells Radhika Pancholi why the company is choosing the M&A route to fulfill its global ambitions.
Why are you looking at acquisitions in the European market to expand your global footprint?
Once we realised that now was the ideal time to fulfill the second part of our mission statement -- of being clothiers to the nation today, the world tomorrow -- we were faced with two approaches to the international market. We could start off as commodity suppliers and restrict our operations in the mid- and lower-segments, which are in any case inundated with players from India and China. Or, we could acquire profitable assets that would help us with the business of production and distribution in Europe and gradually have operations across all segments. We chose the latter as it is strategic in nature, and as part of this plan, we are opening a subsidiary in The Netherlands. This subsidiary would be formed by the end of July this year.
How will this strategy help the company?
First and foremost it will help us to build strong front-end and back-end synergy for the company. Taking this route will also help us to operate in fashion and design-led activities, as opposed to low-cost commodity business.
If faced with a situation like last year, where the rising rupee played havoc on exporters, do you think this strategy would be sustainable?
We are long-term players in this market and when you are a long-term player, you have to conduct your business with a long-term vision. Short-term exchange variations like what we saw last year would not affect a long-term player who would have already taken such things into account to sustain their business plans.
S Kumars also seems to be increasing its presence in the domestic lifestyle market. Comment.
Lifestyle is something that will never go out of fashion. In fact, clothes are one of the necessities to live and when you have increasing incomes around you, brands begin to play an important role. I think moving up the value chain and focusing on the domestic high-growth retail sector are some of the key drivers that will take us from being a Rs 1,239 crore company in 2007-08 to being a Rs 2,161 crore company in 2008-09.