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The biggest fashion story of the year may come from an unusual suspect. Fabindia, the handwear brand and home goods store, has received approval from SEBI this month to launch its IPO. Its estimated size is around 4,000 crore. Yes, Fabindia – the store the prettiest among us love to hate – may just have the answers.
Fabindia was among India’s most innovative startups. It was launched in 1960 by an American employee of the Ford Foundation, John Bissell, with an assignment in India. He started it in an empty room next to his bedroom in his Delhi residence, with a $20,000 inheritance from his grandmother. Ford had commissioned a grant to Central Cottage Industries in India to manufacture goods for export. One of Bissell’s main suppliers was AS Khera, a home furnishings and giftware manufacturer from Panipat. Khera’s son Madhukar was to be given shares in the company in 1976 when the RBI ordered foreign companies to limit their equity to 40 percent.
Fabindia competed with the government-owned Khadi and Village Industries Commission (KVIC) and various state-owned emporiums by being slightly affluent and urban. John’s son William took over the company after his death and turned it into a retail chain. It now operates more than 300 stores across India and a dozen internationally. Fabindia remains India’s most popular ethnic brand. For the upcoming IPO (its date has not been announced), John’s wife Bimla Nanda Bissell and Madhukar Khera have transferred 4 lakh and 3.75 lakh shares to artisans and farmers respectively.
Fabindia’s success will be the model for several Indian designers, newly backed by two large corporate investors – Mukesh Ambani’s Reliance Brands Limited (a subsidiary of Reliance Industries) and Kumar Mangalam Birla’s Aditya Birla Fashion and Retail Limited (of the Aditya Group Birla). The ethnic wear market in India is valued at $21.2 billion according to a 2020 study by Technopak Advisors, with only 12 percent of it in organized retail. The rest is unbranded ethnic clothing sold through informal outlets.
Both conglomerates – with billions in petrochemicals, power, telecom, cement, mining and other money spinners – are investing in fashion despite its relatively small profits. India’s large apparel market is where most of the profits come from, while its luxury segment belongs to a small group of bridal fashion designers. These designers are glamorous celebrities even though they own small businesses. The slot in between, an open premium or spread market, remains entirely untapped. This union of well-known designers with deep-pocketed corporations is an attempt to bridge this divide.
Some have speculated that getting designers such as Rahul Mishra, Abu Jani-Sandeep Khosla, Anamika Khanna, Manish Malhotra and Ritu Kumar from Reliance is a waste project for the Ambani family, but the upcoming Jio Drive mall in Bandra Kurla Complex in Mumbai carry the test. to the company’s commitment to grow the labels by giving them multiple stores across India at more affordable prices. The family is also committed to promoting culture with Mukesh Ambani’s wife Nita being appointed to the board of New York’s Metropolitan Museum in 2019 and daughter Isha becoming a curator at the Smithsonian National Museum of Asian Art in 2021. They own Team of the Mumbai Indians IPL, has bought Hamleys, Boots and is said to have shown interest in Revlon cosmetics.
ABFRL Investments is tied for receiving over Rs 2,000 crore as investment from Singapore’s leading sovereign wealth fund, GIC. Both companies aim to open several hundred stores for their brands as well as venture into verticals such as home appliances and accessories, much like Fabindia.
Fabindia’s performance in the stock market in the coming months will determine the fate of India’s top fashion labels, whether they can really steer towards becoming brands or remain trouser specialists.
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