He studied engineering while growing up in Orissa, but as long as he can remember DPS Kohli always wanted to be a biz whiz.
In an exclusive with Kavita Chhibber, the Chairman of Koutons, the hot and happening multi crore Indian apparel company talks about his life, and why he believes that everything, he has achieved so far, is not just his own genius but team effort.
So for a Sikh growing up in Orissa, moving to bigger horizons would be the first thing if one had to do business?
My father was a business man in Orissa and did fine but I always wanted to go out of Orissa. So I moved to Delhi and got into exporting garments. Then there was a dip in the business and a good friend was in Uptron India. We started making color TVs and supplying to Uptron. The 1982 Asian Games were coming up and there was a huge niche market. We had two manufacturing facilities-one in Delhi and another in Kota Rajasthan. Things were going well.
Then 1984 happened. How did Indira Gandhi’s assassination and its aftermath affect you being from the Sikh community?
The aftermath of 1984 destroyed everything-my factory, our showroom in Rajouri gardens in Delhi. People looted everything-these were hooligans let loose by scheming politicians. And yet even in worst of times, I was able to find another job and worked as a consultant and then as a successful liaison with an insurance company. And yet as I tried to slowly find my feet back, pay off my debts, I still wanted to go back to being a business entrepreneur. Many Sikhs, who could, migrated abroad in the following years, but I didn’t have such an opportunity. Still I was grateful that we didn’t have any personal tragedy or loss of life. Lost goods and money can be recovered but not a lost loved one. I considered it God’s grace that every time in the hour of need, an opportunity would be given to me to support my family and pay off my debts.
Then came Charlie, followed by Koutons which has been an amazing success story. From a turn over of 168 crores in 2005, with 475 stores exploding all over India the target for 2006-2007 is 500 crores. How did that all come about?
My brother in law migrated to Delhi from Haryana and together we again started a small clothing venture called Charlie in 1998. There were a few other brands that were already there but by 1999, Charlie brand became a cult fashion especially in North India. The brand was more synonymous with denim. Soon we also noticed a gradual shift towards Khaki; cotton trousers were beginning to attract consumers.
It was then we decided to launch Koutons which means cotton in Spanish. We decided to start by focusing on a complete men’s’ wardrobe- from trousers and shirts to denim wear. Our marketing was focused on casual wear which we were marketing through our own distributors.
Earlier with Charlie we had noticed that many people were not delivering payments on time, and if we protested they would send the shipment back. So we decided to create our own brand outlets and in a few months we had 4-5 stores open in Delhi. It also gave us a great feedback in what the customer liked and we found that while others would pick and choose say 3-4 styles out of the many that we had created, when we put all our styles on display, customers picked their selections from all the styles. So our own stores gave us a much bigger market and allowed us to showcase everything we had to offer.
During that time we were also exporting to some western chains. Soon in 2002 we switched to a franchisee model and this was a key change that greatly paid off. We would select malls and other places and get the landlord interested in being a franchisee. The stocks were mine and we assured him a minimum return. The rental would cover the electricity and staff requirements for instance. He would have to renovate the store to look like our outlets, give a security deposit and we took care of everything else. The profit margins were a lot lower and for retailers there was no cash freeze either. We haven’t looked back since then.
We realized what a huge domestic market we have. The high class people who are in smaller numbers will still go for Armani or Versace but the huge middle class market has a great affinity for outstanding products at affordable prices and that is the market we are focused on. We used some of our loyal distributors to join hands with us and get us great locations as they were right there.
We supplied the material directly to the stores and our guys had to make sure the stores were operating properly and the relations between the company and the franchisees ran smoothly. My franchisees were taking in profit margins of 15-20 percent while earlier the retailers would do a 50-60 percent mark up on the wholesale prices. Of course we gave the franchisees other incentives as well. The model worked very well. As a result we could cut down on costs and offer many exciting things to the consumer-lower prices, promotions and great discount to give them very good value for the money they were spending.
For example linen was considered very expensive. In India you will get a linen trouser for between 2800-3000 rupees. We got the best linen woven in China and made the same trouser accessible for out customer at the 1200-1500 rupee range. We started with Northern India but now we are opening stores every where.
Our slogan was “Think of it not as a business but as a movement”. Now people are copying us!
Your ad campaigns zeroed in on technical innovation as your mantra for 2004. 2005 went on to call Koutons a life enhancing brand, so what is the mantra for 2007?
Every one in the company is wearing a badge which says “Quality is our Priority.” Its really important to maintain quality. We outsource globally, look at the best global fashion, buy the best fabrics from the best available sources and then recreate the designs to suit Indian taste. Now we are venturing into women’s and children’s wear. So we are expanding the size of our stores to 3000-4000 square feet. Earlier they were about 800 square feet. I have always felt that it is the woman who shops for the household and if she likes something for herself she will also pick out things for her husband and family.
This year we are also introducing something new in the market-we are coming out with the world’s lightest shirt and trousers. These will be made from this extremely light weight fabric that we have developed. So we are always looking to make quality and low cost our priority.
How do you stay honest in a business in India where infrastructure becomes such a roadblock and bribing is an integral part of business? Argonaut managing director Anil Khatod mentioned that his company has invested millions of dollars in Koutons because of the integrity and honesty he saw when he met you and went over the company.
I think faulty infrastructure is a part and parcel of life. I remain true to my values and my work. The most important reason for success in my eyes is the team effort that goes into building a company and every member of ours is treated like family. Several major foreign corporations have entered India, but I’m proud to say that not one executive or worker has left us. Honesty is a relative thing and how honest one wants to be is also up to the individual. My younger sister is married to Prime Minister Manmohan Singh’s younger brother, and there is a simple rule in the household-if we want favors then we are not welcome in the PM’s house or his brother’s for that matter.
I consider myself a cashier of God. He has made me in charge of a business and I have to run it to the best of my ability. In return he has given me a good life and a good family. He has also given me the opportunity to help others, and I will continue to do that.