Mumbai-based Pioneer Embroideries is acquiring Hakoba, a leading brand in embroideries and laces, from Fancy Corporation for around Rs 10 crore.
It is also acquiring some of Fancy Corporation's fixed assets, including land and machinery, for another Rs 4.71 crore.
Confirming the development, Manak Chand Baid, managing director, Pioneer Embroideries, said, "We signed an agreement with Fancy Corporation yesterday to acquire the Hakoba brand."
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However, Bipin Kapadia, promoter of Fancy Corporation, could not be reached for comment.
"Pioneer owns brands such as Sweetpea and Tulip, which are sold to the wholesale market. Through the acquisition of Hakoba we will now have a presence in the retail market as well," Baid informed.
The company has to set up its own distribution network to sell Hakoba. It is also planning to export Hakoba to the US, where it is very popular.
Funding for the brand acquisition will come through both internal accruals and debt.
"The purchase of fixed assets will be funded through debt from the Union Bank of India and from internal accruals," Baid added.
Pioneer Embroideries, incorporated in 1991, came out with a public issue in September 1993. The promoters Rajkumar Sekhani and Manak Chand Baid hold about 58 per cent in the company, while the balance is held by the public.
Fancy Corporation is situated in Kandivili, a western suburb in Mumbai. The machinery will be transfered to Salzer Textiles, a 100 per cent export oriented unit of Pioneer, situated in Coimbatore.
Pioneer Embroideries recorded a turnover of Rs 58 crore for fiscal 2000-01, as against Rs 39 crore in the corresponding period of the previous year.
Net profit for the year ended March 31, 2001, increased from Rs 4 crore to Rs 5 crore. The company is targetting a turnover of Rs 75 crore in 2001-02.
Around 15 per cent of the company's revenues come from exports, while the rest comes from the domestic market.
Pioneer Embroideries exports to Europe, USA, Middle East and Africa.
The company's manufacturing facilities are located at Vapi, Daman and Naroli in Dadra.