The Telegraph
Since 1st March, 1999
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Branded garment firms stare at consolidation

Mumbai, Sept. 22: The domestic readymade garment industry is likely to witness an acquisition spree, as the existing players find the going tough amid competition from a plethora of brands and lower than anticipated growth rates.

If industry circles are to be believed, at least two well-known garment makers are scouting around for buyers for their brands. While one among them is understood to be a Mumbai-based player with a single brand under his belt, sources said that Indus League Clothing Ltd has also sent out feelers to potential buyers through HSBC Securities, its merchant banker mandated for this purpose.

The Bangalore-based Indus League has in its portfolio two well-known brands that include Indigo Nation and Scullers apart from Ironwood. Sources added that the company is looking at a valuation of at least Rs 100 crore for its brands. While its Indigo Nation brand is targeted at executives and professionals, Scullers offers classic formal clothes.

Indus League is one of the few non-infotech companies which has been funded by venture capital when launched in April 1999 with an initial project of over Rs 15 crore. In the first round, Draper International and Dalmia Cements had invested in the company. Subsequently, ICICI Venture had also picked up an undisclosed, but significant, stake in the company.

When contacted in Bangalore, Sriram Srinivasan, who was responsible for setting up the project apart from seven other professionals, denied any move to sell its brands or appointing a merchant banker for this purpose. He said the company was drawing up aggressive plans, which include an enhanced distribution network and entry into new segments.

Industry analysts aver that given the tough competition, factors like strong distribution network, presence across various industry segments and lower costs are seen to be critical aspects required for posting healthy growth rates. The present economic environment, which has already had its impact on majors like Madura Garments—that saw sales volumes dip 12 per cent—has only heightened the need to possess these qualities, they said. Madura Garments, the AV Birla group firm has six well recognised brands, including Louis Phillipe, Van Heusen, Allen Solly, Peter England, San Frisco and Byford.

On the other hand, Raymond Ltd, which is also a leading player has brands that include Park Avenue and Parx. The company acquired ColorPlus to widen its presence in the casual wear segment. Analysts say given the competition in sectors that the company operates, it would now have to look at entering the economy segment. Such a possibility was however, denied by a senior Raymond official who said it had no plans to enter the lower-end of the business.

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