Arvind to demerge branded apparel, engineering businesses
By Raghavendra Kamath|Mumbai|Business Standard | November 09, 2017
Arvind's announcements come at a time when the new GST regime is expected to boost the organised textile industry. The company would also invest Rs 1,500 crore in its textile business over the next four years.
Textile and apparel major Arvind Ltd said on Wednesday it would demerge its branded apparel and engineering businesses from the parent company and had plans to list them separately on stock exchanges. The company would also invest Rs 1,500 crore in its textile business over the next four years.
Arvind’s announcements come at a time when the new goods and services tax (GST) regime is expected to boost the organised textile industry.
The company’s chairman and managing director, Sanjay Lalbhai, said the GST would eliminate unfair competition from unorganised players and help compliant players to become successful.
“The demerger frees up our resources and allows us to renew our focus on our textile business. Over the next three to four years, we will invest Rs 1,500 crore and transform the textile business. We will do this by focusing on three engines of growth and transformation, namely vertical integration, next-generation products, and advanced materials,” said Lalbhai.
The brand apparel business will be demerged into Arvind Fashions. The company has brands such as US Polo, Arrow, Flying Machine, Tommy Hilfiger, and GAP. Arvind said its shareholders would get one equity share of Arvind Fashions for every five shares held by them.
Arvind Fashions had a top line of Rs 2,900 crore and grew at 25 per cent in financial year 2016-17. It aspired to have a top line of Rs 9,000 crore by 2022, said Kulin Lalbhai, executive director, Arvind.
Arvind also said its engineering business would be demerged into an entity named Anup Engineering. Arvind shareholders would get one equity share of Anup for 27 shares held by them in the parent company.
The company said its profit after tax (PAT) in Q2FY18 went down 14 per cent to Rs 62 crore as compared to Rs 71 crore a year ago. Its consolidated revenue went up 13 per cent to Rs 2,628 crore in Q2FY18.
The Arvind stock lost 9.11 per cent on Wednesday to close at Rs 413.50 apiece.