India in recent years has been the focal point of continuous growth and

development making it one of the fastest growing economies of the world.

It is the 4th largest economy in terms of Purchasing Power Parity, after
USA, China & Japan, and is rated among the top 10 FDI destinations.

The Indian consumer is evolving and driving retail growth due to

increased consumption. Private consumption growth contributes to more
than half of the GDP growth and is growing in double digit figures. Several
businesses are reacting to this evolution positively, both through pull and
push phenomenon.

Following a similar trend, the Indian textile and apparel industry is also
experiencing rapid changes and growth. Apparel today has the largest
share of the modern organized retail in India i.e. 20% of the current
market of Rs. 56,000 crore and this is expected to grow at a constant rate
of 20% over the next 4 years.

This section puts together some of the recent trends being witnessed by
the textile and apparel industry. The central theme woven through these
trends is the way the consumer at various income-levels is evolving,
thereby ensuring that businesses are reacting in multiple ways.

India is the second fastest growing major economy in the world.

Fashion industry is pushing to keep pace with the retail evolution
witnessed in India

With such hectic activity on the consumer level, fashion businesses need
funds for expansion and for investing into building their
systems/processes - retailers as well as private equity funds are fuelling
this growth by purchasing stakes in apparel brands. On the manufacturing
front, companies are realising the need to forward/horizontally integrate
their businesses and buying stakes/acquiring front end/related businesses
to get a better grip on the value chain.
This segment digs deeper into each of these trends citing examples of
thought leaders who have already moved in this direction. Within these
trends there are signs of related 'mini trends' and/or 'contra trends',
clearly visible in this industry. Each trend poses a question on what could
be the possible path for companies going forward.

Below is a pictoral interpretation of trends that we are covering:

The 'mass consumer' segment is moving from tailored clothes to stitched
apparel giving rise to discounted apparel stores/retailers. This is causing a
shift from unbranded to branded apparel. The 'middle end consumers',
already exposed to brands is now looking to extend these brands into all
aspects of their life. Brands are thereby becoming lifestyle brands instead
of being product brands only. These consumers are also moving up the
social ladder and wish to flaunt the change in stature by wearing
affordable 'designer prêt wear'. This is prompting designers to introduce
prêt lines and corporatise their lines to reach out to a larger audience. The
'high end consumer' who is exposed to international luxury brands, now
demands them in his/her vicinity. Apparel businesses are realising this
and tying up with international brands to retail in India. These consumers
are also increasingly exposed to environmental issues and want to use
eco-friendly products (including apparel) to do their bit for the society.
Though this concept is at a very nascent stage in India, apparel
companies are reacting by 'going green' and using natural fibers in some
of their collections.
As all consumers, especially kids and the youth, are exposed to fashion
and media, they wish to associate themselves with characters and icons.
Picking on this trend, apparel companies are licensing these
characters/icons for apparel & accessories to increase their customer
base.

Additionally, as consumers face hectic lifestyles, they are looking for

convenience in all aspects of life including shopping. Fashion businesses
are taking the lead from here and taking on consumers at unconventional
avenues of retailing like airports, metro stations, cafes, beauty saloons,
etc.
1
Indian consumer likes a bargain: Rise of discount retailers

Trend 1
Indian consumers are converting from stitched apparel to ready-
to-wear causing a surge in discount retailing
Factory outlets have become distinct and important shopping
destinations
Retailers are increasingly accepting the widely agreed fact that
consumers love a bargain and always look forward to buying brands at
low prices. Factory outlets have become distinct shopping destinations
with distinct audiences. Apparel companies are focusing on this market to
cash in on consumers converting from stitched apparel to ready-to-wear,
further graduating to branded apparel. India is thus seeing a surge in
discount retailers offering year round discounts, ranging anywhere
between 30% to 70%.
The Future Group has recently launched a new format called the 'Brand
Factory' selling national and international fashion brands at discounted
prices with discounts ranging between 25-50%. The store will have as
many as 120 brands such as Arrow, Esprit, Van Heusen, Levis, Reebok,
Lee, Pepe, Wrangler, Provogue and many others, spread over 70,000 sq. ft
of space. The group plans to expand its presence by opening as many as
55 outlets by 2010 The concept is positioned as a direct competition to
Arvind Brand's Mega Mart which also sells its brands at discounted prices.
Arvind Brands is rapidly expanding their Mega Mart chain with plans to
increase there number of stores from the current count of 54 to 150
stores in the next 5 years.
Koutons Retail India, which started as a product brand is today the largest
menswear brand in India in terms of its sales and number of stores. The
success of the brand's positioning is very clear from the fact that from a
store count of 240 a year ago, it has expanded to 999 in 2007, and its
turnover grew from Rs. 58 crore in 2004-05 to Rs 400 crore in 2006-07.
Close on the heels is Cotton County which will be increasing its stores
from 300 to 500 in 2007 and reach a count of 1000+ by 2010. Turnover
currently stands at Rs. 100 crore and is projected to grow to Rs. 500 crore
by 2010. They are also extending their product portfolio to include
womenswear and kidswear.

The Provogue Apparel Group introduced its multi brand discount format
'Promart' in 2007 in Ahmedabad spread over 40,000 sq. ft. and this store
has already achieved a turnover of Rs.25 crore. Their future plans include
opening 20 stores in the next 3 years. The 'Loot' is another discount
format retailer with 16 operational stores mostly in the West and South.
By 201 0 they plan to set up 100 such stores pan-India. The company runs
three formats, viz: signature stores, shop in shop and mega stores of
30000 sq. ft. It carries all major local and some international brands.
Going forward, how will these discount stores bring in higher revenue - by
increasing number of stores to cater to untapped consumer base, or by
adding more segments like womenswear/kidswear/accessories or by
offering better quality/colour co-ordinated merchandise?

Product brands turn lifestyle: Portfolio extensions towards

‘casualisation’ & ‘accessorisation’

Trend 2
Consumers now desire branded products in all aspects of their
life
Traditionally brands that offered formal wear are now extending
into casual wear, accessories, footwear etc.

With most brands turning lifestyle brands, they are opening larger
Exclusive Brand Outlets (EBOs) to showcase their complete range of
merchandise and give an international feel, The past few months has
seen brands opening up very large format stores in India.
The Indian consumer is empowered not only by sheer numbers, but also
by the state of evolution he/she is witnessing, With increase in purchasing
power, increasing globalisation and better discretionary spending
incomes, lifestyle changes have lead to newer opportunities for apparel
companies operating within this domain.
Apparel brands have realised that they need to evolve themselves along
the lines of consumer evolution, Brands do not want to be restricted to
one aspect of consumer life but wish to encompass all his needs, This can
only be done by expanding their product portfolio.
It is thereby seen that most brands that traditionally offered formal wear
are expanding their portfolio by adding new categories such as casual
wear, accessories & footwear. While formal wear only gave them access
to the 8 hour span of working customers with a desire to look good, casual
wear gives them the access to a larger spectrum of customers and to their
needs 24x7.

ITC Lifestyle introduced 'John Players' in 2002 as a budget formal wear

brand similar to 'Peter England', The response was not as expected due to
unclear positioning, However, in 2005 it was re invented as 'style with a
playful side' or 'brand with a cool attitude'. Since then it has grown to over
Rs, 90 crore brand at retail level. Similarly, Raymond's bought over
ColorPlus to add premium casual wear to their portfolio and is now
introducing womenswear. Arvind Brands Ltd, launched Arrow Sport in
2005 due to the growing popularity of the 'sporty-feel' i.e. casual shirts
and trousers category. Today, this sub-brand comprises 22% of sales by
volume and 12%-13% by value.
Similarly, brands are rapidly including accessories & footwear to offer an
entire gamut of products besides apparel. Benetton, a brand that is
traditionally known only for casual wear has also introduced footwear,
time wear, eyewear, perfumes, luggage, wallets, belts etc, Likewise, Park
Avenue has introduced footwear, both formal and ethnic, 'Study by Janak',
a men's occasionwear brand also has footwear, belts, ties and scarves in
their stores. Pepe Jeans which started off as a jeans brand in India is in the
process of launching its range of innerwear and time wear soon. It has
already introduced perfumes and sunglasses from its global accessories
basket into India. Spykar Jeans and Lee Cooper have entered into multi-
accessory categories such as footwear, eyewear and time wear recently.

Some of these brands are: Store Size City Location Comments

Brand Name (Sq. Ft.)
Arrow 4000 Bangalore The store will
offer
complete
range of
latest men's
& women's
collections
with separate
sections for
suits & sports
collections.
Reebok 10,000 Kolkata Reebok
Arena has
different
 floors
catering to
different
customer
segments,
along with a
separate
floor for
fitness
accessories
and
equipment.
Adidas 9,000 Bangalore Sports
Performance
centres
selling the
complete
range of
Adidas
athletic
footwear,
apparel and
accessories.
Pepe Jeans 8,500 Hyderabad The flagship
store has
been
positioned as
the ultimate
one-stop
destination
for the latest
fashion
trends in
jeans and
casual wear.
The store
would display
more than
500 styles of
jeans and
casual wear
for both men
and women.
Dockers 5,400 Bangalore Dockers are
planning to
launch
denims,
followed by
womenswear
 and
accessories
by the
beginning of
2008.

Going forward, how will these lifestyle brands expand their portfolio - by
further sub-branding and re-inventing consumer needs, or by evolving as
specialty stores for every segment or by moving to the higher value chain
and including high end consumers? (E.g. Levis Diva jeans at Rs.8000)

Brands are opening large EBOs to showcase their expanded

product range
These flagship stores are positioned as ultimate one-stop
destinations for the latest fashion trends

Designers get organised: Reaching out to larger customer base

Trend 3
Designers realize the huge opportunities in ready-to-wear market
and are introducing prêt lines
Another trend visible in the Indian designer wear market is corporatisation
i.e. strategic tie-ups with large corporates in related industries to provide
the necessary financial support and expertise in operational management.
The designer wear industry lacks the processes, systems, people and
financial resources to rapidly scale up their operations. The direct
advantage of this would accrue to the designers who would be able to
concentrate on the design and aesthetics rather than on business
planning.
Genesis Colors Pvt Ltd., is the forerunner in the corporatisation of the
Indian designer industry. It is the parent company behind the labels Satya
Paul, Deepika Gehani, Tie Bar and Samsaara. These designers enjoy a
wide distribution network throughout India and abroad of
standalone/franchisee stores and premier fashion boutiques.

Raymond Group launched the multi designer store carrying diffusion/prêt

line under the brand name of Be: It was an instant success among the
target customer group i.e. upper middle segment aspiring to wear
designer wear. This was soon followed by many other such designers. For
e.g Ritu Kumar's 'Label', Kiran Uttam Ghose's 'Kimono', Narender Kumar's
'Chai' and Payal Jain's 'Ado'.

More recently, KK Birla group which owns two little known group-owned
stores in Kolkata - '85 Lansdowne' on Sarat Bose Road and 'Rose Bird' in
Park Street plans to enter into fashion garment retailing in a big way.
The designer wear market in India is witnessing a high growth pattern,
especially in the last few years - efforts are being made to develop this
segment by bringing it into the main stream retailing and making them
more accessible to customers.
Until a decade back, Indian designers were limited to very small revenues
through extremely high priced couture and diffusion line garments sold in
limited quantities. However most recently, several designers have realised
that there is a large market potential for affordable ready-to-wear apparel
and they need to move into this segment to tap the opportunity. Many
designers since then have launched their prêt 'affordable and designer
chic' lines starting as low as Rs.1500, with a lot of designers also seeking
to sell their offerings at major retail outlets. Following this trend
department stores such as Shoppers' Stop, Pantaloon, etc. have launched
exclusive designer wear sections inside their stores. Also designers like
Raghavendra Rathore and Anita Dongre have tied up with Shoppers' Stop.
Similarly, Suneet Verma has tied up with Tuscan Verve to retail his prêt
lines through their stores.
Going forward, how will these designers expand their customer base - will
it be by tying-up with lifestyle brands to retail in their stores (E.g. Wills
Lifestyle) or will they tie-up with international specialty brands coming
into India to design their private label here (E.g. A designer can tie-up with
Macy's when they enter India)?

International fashion eyes India: Making room for luxury

Trend 4
Indian companies see a huge opportunity in partnering with
luxury brands wishing to enter India
The Indian consumer desires to possess international luxury brands as an
inspirational product. Additionally, no Indian retail brand actually qualifies
to be categorised as a luxury brand. This readiness for luxury as an
organised market, has been recognised throughout the world and
international luxury brands are exploring possible avenues and tie-ups to
enter the Indian retail market.
Indian apparel companies have realised the huge potential of partnering
with these global luxury brands wishing to enter India. This helps them not
only to extend their portfolio into the luxury, super premium, premium
segments, but also makes them probable sourcing partners for these
brands in India as well as internationally. Vice versa, luxury brands gain
access to well established distribution channels and customer base.

"Luxury is consumed by a subset of the Super Affluent class. There are 1.6
million Super Affluent urban households in India."

The market segment for luxury is only going to get bigger and better. The
task is therefore to create retailing zones for luxury and upscale products.
In the past, 5-star Hotels have been the most prominent addresses for
luxury retail in India. However with the growing market for luxury in India,
such spaces are proving inadequate. The concept of luxury retail is being
further developed by retailers and mall developers alike.

S Kumars Nationwide Ltd. (SKNL) has specifically set up a subsidiary,

"Brandhouse Retail Limited" to carry out its expansion plans. Brandhouse
Retail Limited plans to bring in 17 international brands into India of which
5 will be luxury, 6 super premium and 6 in the premium segment. It has
already tied-up with Alfred Dunhill Ltd. and Escada, to retail their offering
in India.

In a similar move, Raymond has a 50:50 joint venture with the Italian
major, Grotto S.P.A. The joint venture has launched the highly successful
Gas brand in India.

Planet retail has launched ‘Replay’, a French Premium denim brand in

India.

On the retailers side, Shoppers' Stop is planning to enter the luxury retail
segment with large format retail stores which will house products from
many of well-known luxury brands, including Louis Vuitton, Gucci, Zegna,
Hugo Boss, YSL, Mont Blanc and Christian Dior. The company plans to
invest Rs.100 crore in this model in the first year itself.
Going forward, how will these international luxury brands react to the
Indian market - will they introduce bridge/semi-premium lines for greater
penetration or will they introduce more brands from their umbrella in
different segments? (E.g. Benetton, though not luxury, has now brought in
its Sisley brand)

Consumer become eco-friendly: Apparel brands think ‘green’

Trend 5
Worldwide surge in demand for organic and eco-friendly products
Organic cotton, the most popular eco-friendly fibre finds its way
into international apparel brands
Organic cotton has been able to achieve maximum popularity amongst all
eco-friendly fibers. Global retail sales of organic cotton products are
projected to grow to $2.6 billion by the end of 2008, reflecting a 40%
average annual growth rate. Hence, the demand for organic cotton fibre is
expected to grow to 100,000 metric tons in 2008, an average annual
growth rate of 47%.
Consumers the world over are increasingly becoming environment and
health conscious. Increased concern for protecting ecology and preventing
global warming, especially in the western countries, is boosting the
demand for organic and eco-friendly products across all categories. As a
result of consumer interest, eco-friendly fibre is used in everything from
personal care products, to home furnishings, and for apparel of all kinds
and for all segments.

This growing demand is ensuring that brands and retailers are

implementing long-term commitments to increase the use of such fibres.
Prominent retailers allover the world has a dedicated line of products
which are eco-friendly in nature. Nike, Marks and Spencer, CO-OP,
Patagonia, Timberland and Wal-Mart, which already sell eco-friendly lines;
have been joined by newcomers Reebok, C & A, Hennes & Mauritz, Target
and Next.

The Indian market for these eco-friendly fibres is currently very small due
to low awareness. Given that most international brands are present in
India and Indian fashion trends are influenced highly by the west, it is
expected that demand for eco-friendly apparel would expand substantially
in the coming years.

Though eco-friendly concepts are gaining popularity on at the fibre level in

India, currently the availability on the front end is minimal. Extensive
research is being done by companies on developing other natural fibres
derived from bamboo, soyabean, corn, etc. which lend unique properties
to the garments made from them.

Raymond has introduced an entire range of apparel made from bamboo

fabrics which naturally possess anti-bacterial, anti-static property and
extra capacity to retain moisture. Raymond also uses soyabean fabrics in
their trendy clothes line, as this fabric provides extra shine and moisture
absorbing property. Apart from this

Raymond has developed a specially crafted fabric from Casein (made from
a combination of milk proteins) to be used for making suits, shirts and
jackets.

An international brand named BSC has launched its collection of organic

towels in India. They are even planning to launch kidswear and home
furnishing range this year. There are also some regional brands
introducing a wide range of eco-friendly fabrics in cotton, linen, silk, etc.
made from environmental friendly fibres and dyed with herbal dyes.
Going forward, how is eco-friendly apparel going to fare in India - will it be
adopted only by high end brands or will it be demanded by the consumer?
(Will it only stay a push strategy
or will it become a pull phenomenon)

Indian brands are also introducing eco-friendly fibres for the

'conscious' Indian consumer
Demand for eco-friendly apparel in India is minimal from
consumer end
1

Kids & youth emulate their icons in everyday life: Growth of

Character licensing

Trend 6
Kids and youth are influenced by icons & characters and desire to
possess them in their everyday life
India has become an important market for character licensing
specially in apparel

Today's consumer is greatly influenced by media and he exhibits a

propensity to follow icons to the extent of bringing them into his everyday
life. This growing trend amongst consumers is being tapped by apparel
companies by taking up licensing of popular characters and icons to be
used in their merchandise. This is especially true for the kids and youth
market since they identify with these characters and icons more strongly.
According to Cartoon Network, the business of license merchandising of
animated characters is estimated at Rs. 360 crore in India.

India has emerged as the No.1 market in Asia-Pacific for companies like
Cartoon Network in terms of viewer ship and more importantly revenues.
"Interestingly, children's licensing and merchandising market accounts for
10% of Cartoon Network's revenues i.e. approximately Rs. 300 crore, of
which a large percentage is contributed by apparel, accessories, footwear
and home textile products."

This trend is picking up very fast in India with many companies taking up
licenses of popular cartoon characters. Cartoon Network had launched its
Powerpuff Girls and Dexter apparel through 1,500 retailers in India,
including lTC's Lifestyle stores. Disney entered into a pact with Indus
Clothing in 2006 to launch Disney jeans in India. Mattel has granted The
Shirt Company the license to manufacture and market Barbie apparel in
India.
Nickelodeon, the children's channel, has tied up with Bombay Dyeing for a
merchandising arrangement. Weekender has taken up the retailing for
Toon World and Gini & Jony has tied up with Garfield.

This trend is not restricted to kidswear alone. Brands are also looking
towards icons like cricketers, footballers, rock stars, wrestlers, and super
heroes such as Spiderman, Superman, Tarzan, Krishh, etc. to sell their
merchandise. Apparel merchandise with these icons are widely available
in the unorganised market, however some sports retailers are already
retailing them at their stores.

Nike retails the Indian cricket team jerseys at their stores. Similarly,
Reebok has gone a step further and is retailing cricketer T-shirts like
Rahul T-shirts, Bhajji T-shirts, 12th man to name a few.

Another similar trend has been used by Biba, the women's ethnic wear
brand. Biba has ventured into film merchandising i.e. they liaisoned with
the fashion designer of the film to market the apparel worn by the actress
in the movie and timed its launch in their store with the release of the
movie. By doing this, they have moved to the starting point of women's
wear trends.
Going forward, how will apparel companies further cash in on this trend -
will they add more celebrities like tennis players, rock/pop stars, or will
they create more home grown characters or will they enter into
partnerships with movies/tv/colleges to co-brand their merchandise?

Apparel finds off beat avenues to retail

Trend 7
Companies are exploring new' locations to retail in order to
increase visibility of their brand
Brand building by cafés/restaurants through dedicated
merchandise will also gain popularity in India

Apparel retailing is geared to take on customers at places other than the

traditional locations like neighborhood markets, high streets and malls.
With increased need for convenience and visibility retailing, companies
explore newer locations like airports, metro stations, restaurants, cafés &
even beauty salons.

Retailing at such outlets typically follows two formats - the first is when
space is sublet for retailing branded merchandise at airports, metro
stations, etc. The second kind is when cafés, restaurants, fast food chains
sell merchandise to promote their own brand through T-shirts, caps, bags,
mugs, etc. While brand retailing at airports/metro stations is growing at a
fast pace, brand building by cafés/restaurants through retailing of
merchandise will also be an important trend mostly targeted at kids and
youth.
Airport retailing is an important area which will see growth for apparel and
more importantly fashion accessories. The global duty free market is
estimated at US $ 25 billion for the year 2004. India which has almost
minimal exposure to duty free retailing is now witnessing a lot of activity
in this sector. This has not gone unnoticed by international travel retail
companies who have shown interest in entering India. Some of these
companies are the Nuance Group, HMS Host, Gebrueder Heinemann,
Dufry International, DFS Group, Alpha and SSP. On the domestic front, in
the absence of travel retail companies, it is retailers like Shoppers' Stop,
Oberoi and Pantaloon Retail that are keen to enter this market.
Future Group has tied up with Alpha Airport group for airport retailing.
These Alpha future shops will be spread over 8000 sq. ft. of which 1100
sq. ft. is reserved for fashion, accessories and confectionary. Similarly,
Shoppers' Stop has tied up with the Nuance group to operate stores in
some airports and are expecting to earn revenue of up to Rs. 950 crore
over the next 7 years.

Metro stations in Delhi with high footfalls are attracting the attention of
retailers. Some metro stations already have outlets like Café Coffee day
and it would not be long before branded apparel is retailed here as well.
Similarly, beauty salons like L'Oreal and Lakme selling skin and hair care
products, can be ideal outlets for retailing categories like lingerie,
swimwear, beachwear etc.

Internationally, Hard Rock Café is the most successful example of own

brand retail category. With the advent of such chains in India, we will be
seeing a lot more of apparel merchandise at such avenues. Currently in
India, Café chains like Café Coffee Day are already retailing T-shirts, caps
& bags at their outlets.

Going forward, how will fashion businesses react to retailing at these off
beat avenues - will they create special apparel/accessory range for these
points of retail or will they start retailing aggressively at airports in other
countries (E.g. Hidesign)? Will apparel companies tie-up with fast food
chains (E.g. McDonald's, Pizza Hut etc.) to design and produce apparel for
them?

Apparel brands attract: Investments from Retailers and Private Equity

Firms

Trend 8
Promising growth in apparel brands is attracting investments
from retailers and private equity firms
Conversely, brands are also buying stakes into retail companies
for wider reach

A major trend witnessed in the domestic apparel market is the

acquisitions or equity buying by retailers of well established apparel
brands. Retailers gain because they can retail important brands in their
stores at favourable terms, have a say in their design/product
development and become a partner in the brand's growth. On the other
hand, brands share equity in exchange for good money and assured
presence in some of the best locations.

Following are the acquisitions and Segment Stake

stakes bought by Future Group in
various brands: Brand
VIP Innerwear 26%
Biba Womenswear NA (value of stake
is Rs. 20 crore)
Planet Retail Ali 49%
Indus League Menswear and 100%
Womenswear
Gini&Jony Kidswear 50%
Lilliput Kidswear 24%

Similarly, Reliance Retail is already in talks with various brands for buying
stakes into them. Maspar and Biba are a few of the brands they are in
talks with.

A reverse trend is also seen, wherein brands are buying into department
stores, thus helping them negotiate a better deal while selling their
merchandise in such stores. An example is Zodiac, which has acquired
2.93% in Shoppers' Stop.
Another visible trend has been the emergence of private equity firms
investing in fast growing apparel brands & companies. US based private
equity firm Argonaut has invested nearly Rs. 50 crore in menswear brand
Koutons Retail India to fund its expansion plans. Similarly New York Life
Investment Management Holding (NYLlM), the investment arm of New
York Life Insurance, is said to have bought 8%-1 0% stake in SP Apparels
for Rs. 36 crore. Former World Bank President James Wolfensohn's private
investment fund has picked up 6% stake in Fabindia for Rs. 44 crore.

Going forward, will this consolidation continue or is this only an off shoot
of the unprecedented retail boom in India? Will the interest of PE firms
buying into brands continue or will it reach a plateau in the next 2-3
years?

Indian textile companies realising the fact: Wealth at the end of

Chain

Trend 9
Textile companies are strengthening front and back end
operations through mergers and acquisitions

Companies are increasingly looking to acquire domestic and overseas

companies which complement the value chain. However, it is the foreign
acquisitions which have caught the attention of the industry and the
world. Indian companies are taking on larger companies, integrating the
Indian advantage of manpower & raw material with the acquired
company's strategic location, technology and/or well established
distribution channels.

Textile companies providing raw materials (yarns & fabrics) for the
apparel & made-up manufacturers are also realising the importance of
control through the value chain. This is happening by forging growth
relationships with textile/apparel companies to create synergies and by
forward integrating to get a share in retail markets. This is being done
through mergers, strategic acquisitions or forward integrations.

The sheer number of mergers and acquisition (M&A) deals struck last year
has made 2006 a milestone year for India Inc. According to the
Dealtracker study by Grant Thornton, there were 480 M&A deals in India
alone with a total value of about $20.3 billion in 2006 with the average
deal size being $42 million.

Primarily IT, pharma and biotech have garnered the highest number of
M&As, however textile industry has also had its share in the opportunity.
Forward integration, by the textile companies has been prominent in this
sector as the margins in the initial stages (spinning, weaving) have
shrunk, while subsequent stages (processing, garmenting & retailing) still
manage to have relatively better margins. Another reason for this frantic
move is buyer's high expectations of vertical setups and bigger capacities
in garmenting, be it for domestic or exports.

Foreign acquisitions have specially caught the attention of the

textile industry
Private equity firms make large investments in growing textile
industry

Given the new growth opportunity presented by the quota-free global

textile market and the favourable investment climate created by the pro-
active government measures, private equity flow into the domestic textile
sector is picking up. Textile companies are also realising that this inflow of
funds can help them in ramping up capacities and integrating at a faster
pace to face the quota phase out challenge.

Another trend which is simultaneously visible is the growing investment

by Private Equity firms in the textile sector.

Below are few examples of PE firms which have invested in the Indian
textile industry:
Going forward, what is going to be the growth path of the textile industry -
are we looking at increased foreign acquisitions to forward integrate in
these markets or are the textile companies looking at strengthening their
manufacturing advantage by acquiring / buying stake in complementary
manufacturing companies?

Conclusion:

The trends discussed above clearly
exploring all aspects of expansion
expansion rather than only unilateral
happening at every part of the value
segment.
show that the fashion business is
i.e. it is bound for a multilateral
expansion. Multi lateral expansion is
chain as well as for every consumer

The Indian fashion business is taking cue from international standards as

well as the burgeoning consumer appetite to create their own growth
path. Fashion companies are taking a much larger perspective of this
industry in India and consolidating their position to face it. On the other
hand, the Indian consumer is at a preliminary stage of development and
yet due to international exposure trying to keep pace with the
international fashion scene creating unprecedented pressure on
companies to perform.
This is a window of opportunity which the Indian fashion industry should
make the most of before it reaches maturity which will signify slowdown.
Companies need to react as well as participate through in-depth
understanding of fashion and consumer demands to take on this
challenge.

Indian businesses are creating their unique growth path guided

by the Indian consumer
Fashion industry is exploring myriad options for expansion and
thus creating synergies for itself

ILLUSTRATION OF SOME VERY RECENT TREND REPORT :

July, August & September 2010

Spring/summer end of spring/summer (sale season) autumn/
winter: The perfect transition of trends over the last three months,
helps in forming an interesting pattern for the round up this season.
Though the universal hidden rule of fashion is to follow international
trends, the Indian market makes its own choices and conforms to
only certain trends. Innovative approach to VM, leopard print,
boyfriend fit shirt and double-breasted coat are key trends
internationally, but are conspicuous by their absence in India. A
nostalgic trip courtesy the vintage look is evident as grunge makes a
comeback. The colour palette covered a 180 spectrum from subtle to
powerful vibrant colours (light blue to purple). Emotions are one of
underlying concepts used in VM to enhance the shopaholics mood.
 The sportswear of the season
appears to be minimalistic. Slim fit plays
a vital role in womenswear. The transition
of coloursfrom red, green and black to
darker tones of orange, purple and pink
herald the onset A/W 2010. Comfort fit is
the key element for men. Stereotyped
woollen caps, scarves and hooded jackets
dominate the look a sure sign that
innovative concepts are a distant dream.
The overall look for sportswear is simple
yet energetic.

Menswear this season

is urban and simple
mixed with casual
chic. Slim-fit denim
combined with
checked shirt is the
mainstay. Check shirt
+ check trousers
highlight the modern
grunge look. Slim-fit
single-breasted coat
paired with straight-
fit trousers adds to
the formal elegance.
The vintage look is for Kidswear was delightfully striking and
going back to roots. vibrant. Colours yellow, blue, pink and green
Green, yellow and perked up the environment. Innovative
white accentuate
modernity in
casualwear. combinations newly defined modernity.
Check bottoms paired with T-shirts, denim
skirts paired with slim-fit bright coloured
tops, slim-fit tops and denim accessorised
with scarves are the banging combinations
of the season. Altogether kidswear is very
futuristic.