Celebrity acquires Ambattur unit

Celebrity Fashions has acquired an export oriented unit of the the Chennai-based Ambattur Cothings (ACL).

The companies have signed a memorandum of understanding (MoU), with which Celebrity Fashions has allotted 5,00,000 secured redeemable non-convertible debentures of Rs 100 each carrying an interest of 8.75 per cent to Ambattur Clothing through private placement.

The tenor of the instrument is 11 months and interest will be paid on a quarterly basis. The total issue size is Rs 50 million.

This Chennai unit of ACL is a trouser making facility, which has a capacity of six million trousers in two-shifts. This is likely to more than double Celebrity Fashion's existing garment-making capacities.

The deal is effective from April 01, 2006 as per the terms and conditions mentioned in the Memorandum of Understanding signed in December 2005 and the Business Transfer Agreement entered into in January 2006.

Mainly a garment exporter, Celebrity Fashions has a retail presence in India through its brand Indian Terrain. ACL has a large scale of operation as compared to Celebrity Fashion's and a number of international clients, with Banana Republic and Gap being the more well known brands it supplies to. This acquisition gives Celebrity Fashions a wider clientele overseas.

Celebrity Fashions, which posted a turnover of Rs 110 crore in 2004-05 supplies garments to brands like Eddie Bauer and Kenzo in the U.S. and to Diesel, Marlboro Classics and Kenzon in Europe.

The company had come out with its IPO in December last year and will use part of the proceeds to fund this acquisition.