The biggest fashion story of the year can only come from an unusual suspect. Fabindia, a handwear brand and home goods store, received approval from SEBI this month to launch its IPO. The estimated amount is about 4,000 rupees. Yes, Fabindia—the store among us who love to hate the post-it—may just have the answer.
Fabindia was one of the most innovative startups in India. It began in 1960 when John Bissell, an American employee of the Ford Foundation, was assigned to India. He started with a $20,000 inheritance from his grandmother in an empty room next to his bedroom in his Delhi home. Ford ordered financial assistance to central cottage industries in India to manufacture goods for export. One of Bissell’s main suppliers was AS Khera, a Panipat furniture and door manufacturer. Khera’s son Madhukar was given shares in the company in 1976, when the RBI ordered foreign companies to limit their equity to 40 percent.
Fabindia competed with the state-owned Khadi and Village Industries Commission (KVIC) and various state-owned emporia for being a little higher and more urban. After John’s son William died, he took over the company and turned it into a retail chain. It now operates more than 300 stores across India and dozens of stores globally. Fabindia continues to be India’s most popular ethnic brand. For the upcoming IPO (date unspecified), 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 has become a model for many Indian fashion designers, newly backed by two big-ticket corporate investors—Mukesh Ambani’s Reliance Brands Ltd (a subsidiary of Dependent Industries) and Kumar Mangalam Brewer’s Aditya Brewer Fashion and Retail Ltd (from the Aditya Brewery Group). According to a study by Technopac Consultants, the ethnic apparel market in India is estimated at $21.2 billion by 2020, with only 12 percent in organized retail. The remaining unbranded ethnic wear is sold in informal shops.
Both conglomerates, with billions in petrochemicals, energy, telecoms, cement, mining and other ventures, are investing in fashion despite relatively small profits. India’s large garment manufacturing market is where most of the profits come from, and the luxury segment is a small group of bridal fashion designers. Although these designers have small businesses, they are famous. The slot in between, the gap premium or spread market, remains largely undeveloped. This coming together of well-known designers with deep-pocketed corporations is an attempt to bridge this divide.
Some speculate that bringing in designers like Rahul Mishra, Abu Jani-Sandeep Khosla, Anamika Khanna, Manish Malhotra and Ritu Kumar is a vanity project for the Ambani family, but the upcoming Jio Drive mall in Mumbai’s Bandra Kurla complex bears testament. With the company’s commitment to grow its brands by offering more stores in India at affordable prices. The family is committed to promoting culture with Mukesh Ambani’s wife, Nita, appointed as a board member of New York’s Metropolitan Museum of Art in 2019, and daughter Isha as a trustee of the Smithsonian’s National Museum of Asian Art in 2021. Mumbai Indians, the IPL team, has picked up Hamleys, Boots, and is reportedly interested in Revlon Cosmetics.
ABFRL’s investments are tied to an investment of over Rs2,000 crore from Singapore’s leading sovereign wealth fund GIC. Both companies are looking to open a few hundred stores for their brands and move into verticals such as home furnishings and accessories such as Fabindia.
Fabindia’s stock market performance over the next few months will determine the fate of India’s top fashion labels, whether they remain true brands or trousseau specialists.