Denim maker Arvind Ltd, a Sanjay Lalbhai group company with interests in retail and leading textile brands, is investing Rs 600 crore in those businesses as part of an overall expansion plan through 2012, said a senior company official. To fund the expansion, which will include new retail stores, the company plans to spin off its retail and brands business into a separate entity and has hired Enam Securities Pvt. Ltd to look for possible investors.
”We are planning to hive off our retail and brands (units) to unlock value and to focus better,” the official said. “Retail and brands business is very different from the company’s age-old core business of textile. With the hive-off, there will be more value addition and focus on the retail and brands business.”
The retail and brands businesses — including Megamart, Megamart Outlet Centre, Flying Machine and Newport among others — contribute about 15 per cent of the total revenue of Arvind Mills, which was recently renamed Arvind Ltd. The company is targeting revenue of Rs 600 crore from these for fiscal 2009 from a year-ago revenue of Rs 2,654.96 crore.
“It (the expansion plans) is still at a preliminary stage,” said the official but added that the new structure will likely be in place in a year’s time. Arvind is one of the largest denim makers in India, but has shifted its focus to brands and retailing since the past few quarters following a downturn in its denim business.
By 2012, Arvind plans to have around 30 megamart outlet centres of about 40,000 to 50,000 sq ft each and 250 megamarts with 1,500 to 5,000 sq ft each, up from the current two and 100 respectively. The brands unit currently has 12 labels.
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