The Hindu Business Line : VF Arvind Brands open to buying Indian brands

VF Arvind Brands, the newly formed joint venture between Arvind Brands and the US-based branded lifestyle apparel maker VF Corporation, said it is open to acquisition of local Indian brands. "We will be interested in acquiring strong local Indian brands," VF Corporation President and Chief Operating Officer, Mr Eric Wiseman, who is also the Chairman of the joint venture, told Business Line. The $7-billion VF Corporation itself has grown through acquisitions and has so far acquired 11 international brands.

There are several unique features of the new venture. This is the first time VF Corporation, considered the largest branded apparel maker globally, has entered into a joint venture. The valuation of $33 million for the existing brands is also considered the new benchmark for the domestic branded apparel industry. For example, the $33-million, which VF Corporation gave to acquire 60 per cent in the joint venture, is at least two times the topline figure of the existing brands.

According to market sources, when Color Plus was acquired by Raymonds, the valuation was 1.5 times the topline of the brand. Once the merger and acquisition hits the industry along with the retail boom, the valuation is expected to be seen as a benchmark for all future takeovers.

Textile sourcing

Even with the new joint venture, VF Corporation will continue to source textile through its sourcing office from India, which it opened two years ago. During this year, VF International expects to source $40 million worth of textiles f.o.b. (free on board) from India, thereby, doubling the amount from last year.

Mr Wiseman said there were no current plans to take up manufacturing through the joint venture. Arvind Fashions has transferred the entire existing business to the new venture, except the manufacturing facility, which is based out of Bangalore.

He said that both the partners were in talks for setting up a new joint venture for over a year. "India is a perfect market for us," he said. He added that China and India's share in total revenues of the company may be small but they are the fastest growing markets for VF Corporation.

The joint venture's Chief Executive Officer, Mr Darshan Mehta, said the decision to set up its first joint venture reflects the confidence VF Corporation has for the existing marketing team of Arvind. "We did not resort to milking the brands. Instead, we built the brands as if they were our own," Mr Mehta said.

Mr Wiseman himself acknowledges the role played by Arvind. "They did a great job for us. Our relationship with Arvind has been extremely successful," he said.

Mr Mehta said Lee, Wrangler, Nautica, Jansport and Kipling brands, which is worth $40 million business at wholesale prices, have been growing at around 25-30 per cent with most of the business coming from Lee and Wrangler. Lee itself will add 10 to 11 stores more this year to reach 74 stores totally, while Wrangler will have 10 more stores to reach 50 stores. Nautica will have six stores from the existing two, while Kipling, which does not have a single store, will have five. Jansport will not have any standalone stores.

Apart from being the new CEO of the new venture, Mr Mehta will continue to handle Arvind's other brands, Arrow, which is a Rs 140-crore brand, and Gant.

The other four mass brands of Arvind, which will all be merged with Arvind Mills soon, such as Excalibur and Ruf & Tuf and gets a total business of around Rs 120 crore, will be handled by another official of Arvind.

More Stories on : Mergers & Acquisitions | Retailing | Brands

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Traditional beauty care business hots up

Meet on patent, trademark laws

VF Arvind Brands open to buying Indian brands

Past glory gives way to vibrant dynamism

Idea Cellular Lakshadhikari contest

Castrol enters Hyderabad with BikeZones

`Godrej Lifespace stores not a threat to retail distributors'

Carbon Accessories outlet

Hanung Toys to sell Disney products

Call to improve regulated cotton marketing yards

LIC launches `New Bima Gold'