The Hindu : Business : Arvind shifts focus to branded apparel

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Tuesday, May 13, 2008
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Business

Arvind shifts focus to branded apparel

Special Correspondent

Plans direct fabric retailing
To raise Rs. 700 crore in 3 years

— PHOTO: PAUL NORONHA

NEW BRAND IDENTITY: Sanjay Lalbhai, Chairman and Managing Director, Arvind, addressing a press conference to unveil the new brand identity in Mumbai on Monday.

MUMBAI: Arvind Mills, the flagship of the Lalbhai group and the largest integrated textile producer, has announced plans to transform itself from a pure fabric and apparel solutions company to a strong diversified business group with a focus on branded apparel and apparel retail. The company reported revenues of Rs. 2,655 crore in 2007 and has also drawn up strategies to de-leverage its balance-sheet.

The company has been renamed as Arvind Ltd. and according to Sanjay Lalbhai, Chairman and Managing Director, Arvind Ltd., “The new business environment presents new opportunities. We have looked at each business individually and adopted a strategy that best suits them respectively. Our efforts over the last several years have brought us to a stage where we are ready to maximise the potential within our organisation. With solutions in sight for our core business issues and tremendous growth opportunities in the new ventures, we will emerge as a stronger, more competitive organisation that is well positioned to respond to and succeed in the ever-changing market place.”

A company statement said, “Arvind will focus on enhancing its own brands as well as growing the global brands through partnerships.

It expects a 40 per cent cumulative annual growth rate (CAGR) each in its brands business and in its joint venture business.

Its share of revenue from branded apparel is likely to be around Rs. 700 crore in the next two years.

Its apparel retail business is to be focused on two segments of bridge to luxury and value retail. Value retail under the umbrella of MegaMart is targeting an eight-fold increase in revenue to Rs. 1,000 crore in three years spread over 1.9 million sq. ft. and over 270 doors through a combination of existing smaller format stores and the new initiative of larger format stores selling over 130 brands on discount.

The first of these large format stores is operational in Chennai and another five are to be opened in 2008-09 with a target of 30 such stores in 21 cities over five years.

For the domestic fabric business, the company is evolving a direct fabric retailing initiative to target the premium customers. In the industrial segment, it is focussing on servicing the performance wear, work wear and industrial application fabrics.

To reduce the impact of high level of borrowings on profitability,

Arvind is focussing on debt reduction using cash flows of fabric business and unlocking of value in non-strategic assets. “The company holds certain valuable but non-strategic assets on the one side and at the same time requires cash for its rapidly growing businesses, hence through a combination of cash flows from fabric operation, capital infusion from the promoters and sale of non-strategic assets, we plan to raise around Rs. 700 crore over three years to be used towards debt repayment,” said Jayest Shah, CFO, Arvind.

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