TubeKnit Fashions to expand US presence

TubeKnit Fashions Ltd, Tirupur-based fashion knitwear manufacturing company with a turnover of Rs 101 crore, is planning to expand its business in the US market.

Initially, the company would target GAP, a leading fashion retailer. At present, the company manufactures 38,000 pieces of garments per day, 95 per cent of which is exported to European fashion houses like Tommy Hilfiger.

The company is planning to expand its manufacturing capacity by setting up an additional garment manufacturing unit with a capacity to make 40,000 garments a day. It would also set up a cotton yarn spinning unit with 20,400 spindles and additional facilities for dying, printing, cutting, stitching and embroidery. The company is expecting to bag an order from GAP once the expansion is completed.

P Parthasarathi, managing director of TubeKnit Fashions, said: "We have a steady clientele in the European market. Now, the company plans to tap the US market. We export around 95 per cent of our produce to European companies like Tommy Hilfiger and Netherland-based firms like Garcia, S Oliver, Cool Cat, We Europe and Imps & Elfs. In the UK, we have clients like Tesco, Animal and Primark."

"We do have small clients in the US market. However, once our expansion project is completed, we will target big fashion houses in the US, including GAP," he said.

When asked why the company was not targeting firms like Nike, Reebok and Adidas, Parthasarathi said: "These companies' requirements are quite different from what TubeKnit Fashions produces. These firms require more of garments made from technical fabric as they specialise in hardcore sports wear, whereas we specialise in fashion garments. GAP has a very similar garment range to that of Tommy Hilfiger."

He said the expansion projects would be completed by August 2008.

The company is also trying to tie up with a few Europe-based brands to get licence to use their brand, and to manufacture and export their products.

"We have shortlisted five companies from our clientele, with whom we will soon be beginning discussions in this regard," Parthasarathi said.

The company does not have a significant presence in the domestic market, but it is making knit garments for denim brands like Lee and Wrangler during the lean season.

The company is planning to raise around Rs 42 crore for its expansion through an initial public offer of 5,20,000 equity shares of Rs 10 each and a public issue of 37,55,000 equity shares of Rs 10 each through 100 per cent book building process. The price band is Rs 100 to Rs 120 per share. Of the total shares, two lakh shares are reserved for the employees of the company. The remaining 40,75,000 shares are open to the public.