Birla VXL to push garments

Dual initiatives part of the company's restructuring process

Birla VXL Ltd, the textile outfit of SK Birla group known for OCM and Digjam brands, is planning to give a big push to its readymade garment business in the export and domestic markets as a part of its ongoing restructuring program.

It will raise Rs 30 crore from the market, most of which will be deployed for building retail brand and expanding capacity of the readymade garments.

The lenders of Birla VXL believes that it would help to improve the health of the company through better margins.

The company earlier use to sell its menswear range under the 'Jack Barclay' brand but the brand profile was felt to be low-brow compared to its fabrics brands OCM and Digjam.

The company might revive the brand in a big way, sources indicated. It was now going through a restructuring process as more than half its net worth had been eroded. It was carrying a debt burden of around Rs 400 crore.

The company would be hiving off its OCM division into a separate company called OCM India Ltd (OIL), which in turn will be divested to repay a portion of the debt.

Birla VXL had a product range the covered woollen fabric, worsted yarn and ready made garments.

It had three units at Amritsar (called the OCM division), Jamnagar (the Digjam division) and universal clothing division at Faridabad.

Sources in the group said the lenders of Birla VXL had approved of the final restructuring programme last week and suggested that the company launch a major thrust in readymade garment segment both in the domestic and overseas markets along with the hiving-off of OCM division into a separate entity.

According to sources, the company intended to expand its output of ready-made garments, particularly for export markets, following the phasing out of quota restrictions in the US market. "The company is planning major investment in readymades and a part of this will be in brand promotion. The company has a good retail brand in Jack Barclay," said sources.

The SK Birla group will raise Rs 30 crore mainly through equity route by issuing fresh shares after the restructuring. "The modalities for this are being worked out," the sources added.

Sources said it would add new product variants like jackets in the readymade segment along with existing range of shirts and trousers.

Birla VXL has seven major lenders "" Asset Reconstruction Co of India (ARCIL), Bank of India, Union Bank of India, Punjab & Sind Bank, Uco Bank, State Bank of Saurashtra and Bank of Baroda.

Arcil has the highest exposure of around Rs 300 crore which it acquired from other FI's.

Bank of India and Uco Bank had exposure of Rs 63.23 crore and Rs 25.89 crore respectively.