It’s been a long time since MAS was established. Tell us a bit about the start.
When we started we were also like any other entrepreneur. I had a mechanical engineering background and I was working at Walkers Engineering for about a year or two. Mahesh was a chemical engineer and Sharad was an accountant. So we had the advantage of having three different people with three diverse skills working towards a common cause. Like everybody else, all we wanted was to improve quality of life and provide a stable future for our families. So we invested our life savings of what $10,000 would be today, just enough to buy 25 sewing machines and established the company Sigma Industries. At the inception we had just 40 machine operators. We played many roles, driver, mechanic, supervisor are just few to name. So from 40 employees, we have grown to almost 83,000 colleagues, 30 years on. We are really proud of the business we have built together.
What are your views on Sri Lanka’s design capabilities?
I think we have come a long way, as far as design is concerned. Several institutes like the University of Moratuwa, AOD and LIFT have played an integral role in providing pathways to budding designers. Our designers are provided much needed exposure at international events in Milan, London, Paris and New York. Some of them have even gone onto start their own labels. From then to now, we definitely see a marked improvement in the design capabilities of Sri Lankans.
Where many have failed, you have been quite successful. Tell us about your experience in carrying out businesses in India.
We have been in India for 15 years now. We have two manufacturing facilities in Chennai and a high-end lingerie brand based in Bangalore.
It takes time to get a good foothold in India, for many reasons. The documentation process is extensive and requires meticulous planning. It was really difficult to incorporate a company there. We could produce the garments, but we had to have the patience to launch a brand. But over a period of time, we learnt out how to work in India. We have a very good team, they received good training, and plenty of support from Sri Lanka. As a result, the factories were able to performed very well, from day one.
Being one of the largest lingerie manufactures in the world, if we were to start our own retail brand, we felt that India might be the best place to start. India was our first pick mainly because of proximity, economic growth rate and the large population. The FTA with India gave us easy market access. We did not want to compete with Marks & Spencer and Victoria Secrets by entering the market in the West. They were not retailing in the South Asian region.
There are a few lessons I learnt through this exercise; if you are going into a new country, if you are launching a new brand, you need to be confident about the product. Identifying the desired target market and having the right strategies to approach them are also important. India is a massive market, it’s like a layered cake. India has a middle class of half a billion, which is further segmented. It’s like a layered cake because there are different segments within the middle class. So, you need to know, even among the middle class, which segment you intend on targeting. However, we had to overcome the cultural barriers. Most of our marketing efforts were spent on educating the consumer. The initial five years were really tough.
India is not homogeneous. Operating in India is like working in four different countries. The sense of fashion, style, skin color and festivals differ from region to region. We currently retail in about 1,500 outlets in India. We have four of our own independent stores, in Bangalore, Delhi, Jaipur and Mumbai. We intend on increasing it to 10 stores across India. We are on several e-commerce platforms as well. Therefore, we are well settled in India at the moment.
Looking back, India is probably one of toughest assignments I had at MAS.
Marketing is a core function within every business. What is MAS’s approach towards marketing?
Marketing is a very expensive budget item. When you spend on marketing, you don’t see immediate results. However, to be successful in marketing, you must understand who your real consumer is and what their habits are.
For Amante, we have identified our key segments and mapped their lifecycles. Our products are developed and marketed targeting their purchasing needs and patterns. If the customer is not at the center of the marketing plan, marketing becomes a cost item with little or no returns.
You can’t just open up businesses. Research must be carried out. Is it the price, the look of the product, the visual merchandising, the fit, the fabric or was it the comfort factor that is important to the consumer?
Surprisingly, we found out price was not the main factor. In fact, it was right at the bottom. Fit was the most important element to most of our customer.
How do you measure success of a product or a design after you introduce it to the market?
The simple measurement is, if it sells well, it’s successful. I think it’s all about giving the product time in the market and understanding what you mean by success. There are some products, which are your cash cows. Such products should be manufactured with economies of scale and be supplied to the market without interruption.
In the fashion industry, we use some products for brand building purposes. These high-end products boost brand awareness and increase brand equity. Amante is a fashionable brand. Such products don’t sell at the same speed as the others. Nonetheless, it’s important to keep an eye on the bottom-line.
At MAS success has different definitions depending on the product category. For some, it’s repeat orders and sell-through, and for others it is building brand value.
How do you explain the change in the scope of business, since MAS started its operations?
When we started enjoying our initial successes in lingerie, we were the only company operating in that space in Sri Lanka. So we decided to stay focused. We were extremely focused on the product. Because when you start getting good results, you get a lot of comments on how differently you could do things. But we were not willing to change our strategy. We continued to be focused on lingerie manufacturing. When you are product focused, you put all your resources behind that one category. Whether it is machines, man power or funding resources. So that’s one of our biggest success factors.
I want to tell you about the 5Ps of our organization. People, Partnerships, Product focus, Processes and Profits. You reinvest the profits in people and machinery. So that was another key factor behind our success.
When we were confident of our skills and knowledge in processes and manufacturing, we moved in to performance sportswear from intimates-wear. Nike is one of biggest customers. But our culture, values and skills have remained the same. To manufacture performance sportswear, we needed to deal with special fabrics and special processes. We are not only manufacturing crew neck t-shirts with a swoosh. We produce special Nike T-shirts and swimwear. We have manufactured swimwear for Olympics too. We even produce Nike products for most rugby and soccer teams in Europe. It is noteworthy that we are the clothing sponsor for Sri Lanka Cricket. Amidst all this, our core has remained the same. It’s just that we have branched in to different categories.
How did you sustain your organizational values through changing times?
One of the first joint ventures we entered was with Martin Trust of MAST Industries. It was an interesting joint venture because it started with a hand shake and trust. Because he was representing a very large corporate, Mr. Trust asked us, “If there’s a problem, what is your exit clause in the joint venture?” That’s when we realized that we didn’t have such a clause. Naturally, our approach towards the next three joint ventures was more formal. Thereafter, we started building our business with a series of joint ventures, they were all good partnerships.
One particular partnership that comes to mind is Bodyline. It is a joint venture between MAS holdings, MAST Industries and Triumph. At that time, we were used to putting up factories which were around 20,000 square feet. But when the CEO of Triumph Mr. Spiesshofer and the CEO of MAST Mr. Trust wanted to form the partnership, they said, “We need 20 acres”. Since we didn’t have money for such a large project, we proposed we own only a 10% stake of the business. But both Mr. Spiesshofer and Martin Trust said, “No, if you are going to be a partner with us, you will be an equal partner”. We clearly mentioned that we didn’t have the capital to invest. They said that they would loan us the money to invest, and that we could pay them back from the profits. They were nice enough to not charge any interest. It is that gesture that taught us what mutual respect was all about. We were the small kids in the block. They were two giant co-operations in Germany and the US. We were nobody in Sri Lanka at that time. But yet, they respected us. It taught us the fundamentals of building partnerships. Trust was one, mutual respect was another.
We have been in the lingerie business for a long time. But those fundamentals have remained the same, just like our values. They never change. Honesty and integrity have played a crucial role in shaping who we are. Trust and mutual respect are also equally important. Humility is an essential ingredient to be successful at MAS. In spite of us being a large company, we have to be humble. Also there should be freedom and accountability. We have that across all our units, to date.
On which factor do you emphasize most, when developing a product or a design? Is it value-engineering, or cost-reduction, or both?
Cost is dependent on the market you operate in. Value engineering will drive down your costs. We focus on value engineering, at MAS. The internal innovations we’ve developed have improved productivity and simplified tasks for the work force. As a result, we now have a team member who is multi skilled and more efficient. It has helped them in earning an extra Rs10,000 per month.
So, I think value-engineering is absolutely important. It could drive down cost and provide multiple benefits to the operation and the people involved in the operation. It also opens up new avenues for any business.
How will MAS respond to constantly changing trends in fashion and new innovation challenging current market structures? Can you tell us about the future of MAS?
Similar to other industries constantly innovating and becoming more technology dependent, we believe clothing will also become smart. We are already in the smart clothing market. We are manufacturing garments with sensors for Nike and several other players. The sensors inside the garment touch the body of the wearer and read the heartbeat, lung capacity and everything you want to know about muscle activity. So, if you are in to track and field, you can make sure that you are using the right muscles in the right way. We are already playing in that space.
We envision the future to be a continuous journey along the path of innovation.