Growth strategy for a leading garments manufacturer and retailer

A large manufacturer, retailer and distributor of winter wear and denim products in North India was looking to significantly ramp up its manufacturing and retailing operations. The company was seeking a strategic partner to source machinery for its new plant

The client engaged NKRP Consulting to advise on an optimal strategy for market expansion. NKRP evaluated the client’s current financial position, capital structure; expansion plans and recommended the following options:

• Sourcing from the existing Asian supplier (no. 2 in the world) with upfront payment (debt would be very high)
• JV with the existing Asian supplier (This approach would reduce initial capital investment however reduce the operational flexibility and reduce reserves owing to regular dividends)
• Engage with the new supplier - European supplier (Better quality machines but 20% more expensive)

After a series of negotiations, the NKRP team was able to obtain machines from the European supplier on a clean credit and a deferred payment plan for 3 years at prices matching to the Asian supplier.

This helped our client become the top manufacturer in the country, reduce the burden of upfront capital investment and avoided lock in with a single supplier.