Arvind Ltd. has announced its decision to raise about Rs. 740 crores by diluting 10 per cent stake in its brand business arm, pegging its enterprise value at Rs. 8,000 crores. The entire stake will be picked up by Multiples, the private equity firm founded by Renuka Ramnath.
Arvind’s brand portfolio is among the strongest in India and has many power brands that have grown at a phenomenal pace. The business clocked a turnover of Rs. 2,300 crores for FY 2015-16 and is one of the fastest growing businesses in the country with a CAGR of 25 per cent for the past three years. The unmatched portfolio includes global marquee brands, such as Calvin Klein, Tommy Hilfiger, US Polo Assn., Ed Hardy, Hanes, Arrow, Gant and Nautica, among others.
Commenting on the development, Mr. Sanjay Lalbhai, Chairman and Managing Director of Arvind Ltd., said: “We are delighted to have Multiples as an investor. This transaction reflects the confidence of the investor community in the overall business strategy, the robustness of the platform and quality of our leadership team. The deal is an important milestone in our journey to be a fashion, apparel and accessories powerhouse.”
He added: “With India becoming the fastest growing economy in the world, we are confident of continuing this growth momentum and taking the business from over Rs. 3,200 crores this year to Rs. 9,000 crores by 2022. This transaction helps Arvind unlock the value that the brands business has accomplished in a short period and add financial muscle to future strategic opportunities for the Group. We will immensely benefit from our association with Multiples.”
Meanwhile, the company registered growth in the consolidated revenue by 19 per cent at Rs. 2,331 crores for the quarter ended September 30, 2016, as against Rs. 1,957 crores in the corresponding quarter of the previous year. Consolidated EBIDTA is up two per cent at Rs. 232 crores against Rs. 228 crores in the corresponding quarter of the previous year.
Profit after tax before exceptional items grew by 20 per cent to Rs. 78 crores as compared to Rs. 65 crores in the corresponding quarter of the previous year. Profit after tax after exceptional items, which consisted of retrenchment compensation, was Rs. 72 crores (Rs. 71 crores).
Commenting on the results as well as outlook of the company, Mr. Jayesh Shah, Director & Chief Financial Officer, said: “Our textiles business, which recorded 9% revenue growth, continues to deliver a strong performance as we continue to pursue a calibrated growth strategy. The brands business continues to demonstrate strong growth with 33% growth in Q2. Our established power brands consolidated their market positions. We believe that we will have continued growth momentum in the second half of the current financial year.”