Indus Fila may sew up apparel brand buyout

Indus Fila, Bangalore-based textile manufacturer and exporter, has firmed up plans to enter the domestic market by acquiring an international apparel brand soon. The company has initiated a due-diligence process.

"We will commence negotiations in the coming weeks with a few international brands, which we have already identified. These brands are in the region of $30 million (Rs 134 crore) to $100 million (Rs 448 crore).

"We have realised that acquisition of an established fashion apparel brand is the best way to enter the domestic market," Nitin Mandhana, vice-chairman and managing director, said.

According to him, there are gaps in the retail market which the company intends to exploit.

"For instance, there are limited options in kids wear. Besides, branded trendy sports wear for youngsters is yet to make a mark in the local market. We are looking at such brands and the due diligence is on," he added.

Mandhana said funding for the acquisition will come through internal accruals and private equity firms.

"Depending on the valuation of the acquisition, we will take a final decision on the funding. We are also considering the option of an initial public offer," he stated.

The firm will enter the retail space through multi-brand retail outlets. "We will not target boutiques or hypermarkets. Our retail plans will have the masses in focus," he stated.

Mandhana also did not rule out the possibility of acquiring a local apparel brand. "We are looking at certain local brands, which are not less than Rs 100 crore.

"If the brands fall into our plan of action, we might acquire a local as well as an international brand."

With seven decades of experience in the garment sector, Indus Fila has been supplying ready-to-wear apparel to international brands such as Mexx, Armani, Levis, Nike, Tommy Hilfiger, Philip Van Heusen, Haggar and Wal-Mart. It also supplies fabric to local garment producers.

Last fiscal, the company recorded Rs 85 crore in turnover. In the first half of 2006-07, revenues had reached Rs 111 crore. Revenue projection for the 2006-07 fiscal stands at Rs 257 crore.

Indus Fila acquired the fabric division of Sai Lakshmi Industries for Rs 90 crore earlier this year.

"It was a perfect fit for the missing link in the vertically integrated production plans of the company. Today, we have order books of three months, which is extremely healthy in the industry," Mandhana claimed.