Himatsingka Seide firms up plans for third foreign buy

Bangalore-based silk fabric manufacturer and exporter Himatsingka Seide is firming up plans for its third foreign acquisition. The company has said that it plans to acquire a company in the branded bed linen space overseas in the next few months.

In the past one year, the company has acquired control of two foreign companies -- the US-based Divatex Home Fashions Inc for $53 million and Giuseppe Bellora SpA, Italy for which the company paid $27 million. The next acquisition is also likely to be in the US or Europe.

Both the acquisition, add tremendous value to Himatsingka. Bellora, being a niche luxury brand brings exclusivity, while Divatex- being the third largest bed linen distributor to US brings scale to the business.

"By virtue of both catering to different geographies - Bellora (Europe) and Divatex (US), Himatsingka's distribution reach has increased tremendously," an industry analyst noted.

At present 85 per cent of the total production from the new Rs 400-crore bed linen plant that the company has recently set up in Hassan will be sold through the two companies and the balance is expected to be sold through the third acquisition. This unit, under SEZ norms, is expected to start commercial production within a month's time.

The Rs 245-crore company has said that a part of the funds for this acquisition will be raised through promoters. "We are in the process of considering a preferential issue of warrants convertible to equity shares to the promoters," the company's CFO Rajesh Kunnath said.

The previous acquisitions had been funded through the $60 million that the company had raised through GDRs in December 2005.

The company may also look at introducing the two foreign brands it has acquired this year, through which the company is selling its products in the foreign markets at present, in the Indian markets in the near future.

The company is also looking at organic growth by introducing its home furnishings retail brand 'Atmosphere' in foreign markets. The company has recently opened Atmosphere retail outlets in Dubai and it will be entering Hong Kong or Singapore soon. The three regions are on the company's radar as they are considered emerging markets in the home furnishings segment on account of the booming construction sector (both residential and commercial).

According to industry information, Himatsingka is expected to open five new stores in the current fiscal. The company currently has 12 atmosphere stores "� 11 located in Indian tier 1 cities, while 1 store (5,000 square feet) is in Dubai.