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India's Fragmented Work-Wear Industry
The work-wear market in India is highly fragmented. The organized segment is very small with few private players such as Uni Cots India and Industrial Workwear. The unorganized segment constitutes a major portion of the work-wear market. Hiring local tailors to supply uniforms is the common trend in India. Capacity constraints sometimes lead companies to split their orders among several vendors thereby compromising on quality and consistency. The lack of professional apparel manufacturers in a rapidly developing economy makes India a strategic destination for Cintas' expansion.
Booming manufacturing and service sector
Cintas' product line includes flame resistance clothing, which is a necessity in the manufacturing sector. As per the index of industrial production (IIP) data the manufacturing sector posted a 9% y/y growth for the fiscal ending March 2008. Apart from capacity expansions by Indian players, a large number of multinationals are setting up manufacturing facilities in India. The automobile industry itself is witnessing investment by giants such as General Motors, Toyota Motor Corp. and Volkswagen. These foreign players will demand professional services to meet their work-wear requirements. On the other hand Indian corporations, which are taking rapid strides towards modernization, would also prefer contracting an established manufacturer for providing them the necessary work wear and safety uniforms.
Cintas provides customized solutions to various segments in the service sector. Among these restaurants, retail and the healthcare segment offer vast potential in India. A recent study indicated that India is the most sought after retail market in the world. While leading international brands such as Metro, Marks, Carrefour and Walmart have already forayed into the country, Indian players such as Pantaloon Retail (Big Bazaar), K.Raheja Corp (Shopper's Stop) and RPG Enterprises (Spencer's) are vigorously spreading their arms. The restaurants segment is also witnessing the entry of multinational chains such as Mac Donald's, Yum! Brands Inc's and Papa Jones. As for healthcare, the segment has attracted major investment from the Government, private providers and private equity funds in the last two years. A Pricewaterhouse Coopers report estimates the healthcare industry to be worth US$ 40 billion by 2012. The growth of these segments, coupled with low competition, provides vast opportunity for Cintas to make inroads into India.
Conclusion
There are businesses in India which involve a high level of customer interaction but the corporate uniform culture is not popular. One such growing sector that Cintas should target is banking. The vast network of public sector banks and most private banks do not have a formal uniform and work-wear simply means formal attire. Cintas can also tie-up with the government sector to provide staff uniforms for services such as transport. However in order to gain a firm foothold in the country the company must adapt to the Indian dressing sense and introduce saris and kurtas to its product line. Cintas can also tie-up with Indian textile firms such as Bombay Dyeing, Century Mills or Arvind Mills for sourcing raw materials for garments.
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