Pramod Arora, Joint MD, Archies Ltd. has been associated with Archies since 1981, two years after it was started. Arora’s association with Archies began as a printing advisor, then doing outsourced work, and eventually joining the company in 1993 as Head of the Paper Rose Brand. When the company went public, he was inducted on the Board of Directors as Executive Director. Arora’s role as Executive Director and Joint Managing Director, encompasses almost all spheres of the company’s operations. He is in charge of production, finance, corporate affairs and international tie-ups.
Archies Ltd. is the largest retail chain in India in the greeting and gifting segment with 174 stores in 49 cities and 300 + Franchisees. Archies is also Asia’s largest Greeting Card Company and exports Greeting Cards to the sub-continent, Russia and Western Europe. Archies is a Superbrand since the inception of the concept in India in 2003-04. The company has exclusive licensing and marketing agreements with world class brands like American Greetings, Carte Blanche, Fizzy Moon, Russ Berrie, Keel Toys to name a few. In April 2010, Archies launched an integrated manufacturing facility and distribution warehouse spread across over 3 acre in Manesar, Gurgaon.
Speaking with Jasmine Kohli of IIFL, Pramod Arora says "We plan to add 30-40 more stores per annum, in the next three to four years."
How do you see the Indian gift industry in the next five years?
I look at it very positively. It is growing very well. The habits of Indians are changing very fast and with more disposable income in their hands so there is a tremendous potential for growth.
Trend has changed, no one goes to greet anyone without gifts, be it flowers, wines bottles, etc. So, we get involved at some stage; say either directly in terms of gifts, wrapping paper etc.
The social expression industry is basically to bring joy, cheers, and smile to everyone, be it good times or bad times. So the whole idea was to bring happiness to people.
What is the share of corporate gifting? Where are margins better?
The whole gift segment is growing by about 25%. As of now, we have certain gifts segmented as corporate gifts and there are many gifts which don’t come into the catalogue of corporate gifts but many corporates buy them so that break up is really little difficult to give.
To give an estimate it is ~10% of our gift sales. Rest will be general public buying from the shelf.
Margins are mixed.
Do you manufacture greeting cards yourself?
Greeting cards and paper products are completely manufactured by us. We have a complete in-house manufacturing facility.
We import about 20% of paperboard and 80% is domestic. Raw material is procured from both domestic and international markets. We mainly import our paper board from countries like Sweden, Indonesia, China, and Korea.
In the gift segment, the range is so vast that it is impossible to manufacture on our own. There are numerous categories of gifts and sub categories within them.
A lot of the Social Expressions range like Mugs, Sentiment Quotations, Sentiment Photoframes etc are designed in house but are manufactured by others.
In addition, we have exclusive tie ups with world renowned brands like Russ Berrie Inc, of USA, Keel Toys of UK, Fizzy Moon of UK and Me To You of UK, where we piggy back on their production runs.
Did the downturn have any impact on your business?
Yes it did, to a certain extent. People sentiments were affected. It was the youth who were affected mainly the workforce of IT, BPO related jobs, where hiring was down.
Celebration of various events and days was comparatively low as compared to earlier times. So, there was slowdown. But our sales still grew at 11-12% as against 18%.
What kind of competition do you face from other players, organized and unorganized?
In the Greeting Cards business we have no competition. There is no organized competition and from the unorganized players the competition is more seasonal.
In the gifts segment as well, we don’t really have any organised competition. But as the basic concept of gifts is so wide, any store selling items that can be gifted could technically be called competition.
International trends suggest there more physical cards are sent than email cards. What is your take and how is the trend in India?
I think e-cards are a fallacy. It was only when there was the DOT COM boom and it hasn’t geared up much.
It has only affected the seasonal card sending habits, and that too not e-cards but the text messaging.
Brief us about your retail and institutional sales?
Institutional sales are ~10-11% and the rest is either through our own stores or the franchisee retail or multi brand stores and modern retail trade.
Brief us about your financials?
The total income for Q1 FY11 was at Rs347.10mn, up by 22% from Rs282.9mn in the previous year. The Net Sales for the first quarter of the current fiscal year was Rs345.06mn as against Rs281.6mn. Other Operating Income stood at Rs2.04mn as against Rs 1.3mn in the same period last year. The PAT increased by 10% to Rs9.6mn from Rs8.7mn last year. EPS also registered an increase of 10% and was at Rs1.43 as against Rs 1.30 in the previous year.