Carrera of Italy to set up Rs 500 cr unit

State to hold 34% cashless equity in the joint venture

Italian apparel major Carrera Holdings Inc (HCI) has selected Maharashtra as its Asian production hub. The company will set up its manufacturing facilities at an investment of Rs 500 crore.

The company decided set shop in the state, ignoring an unmatched free power and land incentive offered by China. The lack of clarity in corporate laws in China and a vibrant stock exchange in India were the two prime reasons for HCI's decision.

A memorandum of understanding to this effect was signed between HCI and the Maharashtra Industrial Development Corporation (MIDC) here on Saturday.

Vivek John, chief executive officer of HCI, said: "China offered us free land and power, besides financing options for procuring machinery. But we chose India because of its inherent heritage in the textile industry."

The state government will hold a 34 per cent stake in the joint venture with HCI.

State minister for industries Ashok Chavan said: "In the joint venture with HCI, the government will hold a 34 per cent cashless equity in the special purpose vehicle that will be set up for the manufacturing facilities being set up by HCI in Solapur and Kolhapur. A single-window clearance mechanism will ensure speedy administrative clearance for the project."

In a related development, the Chinese government has expressed its keenness to forge joint venture arrangements in the Asia-Pacific regions with Mumbai to synergise the inherent strengths of the two nations.

On HCI's preference to Maharashtra, John said: "There is a complete lack of clarity in corporate laws in China. Under the existing Chinese laws, it is not easy to understand where does the responsibility of a multinational like ours begin and end. Secondly, we faced an insurmountable language barrier. Thirdly, we need to invest in a place that will allow our employees to participate in our growth process. Moreover, we need a vibrant stock market to work with as a mechanism to evaluate our performance on a day to day basis."

Chavan emphasised that the state government would constitute a committee of the industry department to evaluate thrust sectors that need to be identified and where policy changes are required.

V K Jairath, state industry secretary (who also holds the additional charge of Sicom, the state-owned development bank) said: "We are keen on a full backward integrated textile initiative being undertaken by HCI. The projects entailed as per the business plan of the current special purpose vehicle include the textile cluster at Chincholi, the setting up of a textile processing and finishing unit at Kolhapur, a loom manufacturing unit at Kagal in Kolhapur, the accounting and business office at Vapi and a retailing outlet. The backward integration would eventually be completed with the sourcing of cotton from the cotton producing districts in Maharashtra."

Echoing his views on backward integration John said that the cotton variety, having a 30-40 per cent count, that is available in Maharashtra, was ideally suited to the apparel (denim trousers) manufactured by HCI.