INDIA BUSINESS WORLD - APRIL 2007
The Month that was ...

MAYUR SUITINGS STITCHES PLAN TO BUY INDUS

Rajasthan Spinning & Weaving Mills (RSWM), owner of Mayur Suitings, may buy a controlling stake in Indus Clothing, the erstwhile franchisee of Lee Cooper and the current franchisee of Disney, for around Rs 45-50 crore. Industry analysts see this as the beginning of a series of joint ventures and mergers between fabric makers and brand retailers.

Several manufacturers and exporters nurturing retail ambitions are in talks with retailers for similar arrangements. It's a win-win situation for both parties. While the manufacturer gets a distribution network at one go, the retailer gets a dedicated manufacturing capacity, feel industry sources.

For instance, RSWM, the flagship company of the LNJ Bhilwara Group, has been making yarns and fabrics for years. It plans to enter the consumer retail business and the only way it can expedite its new business is by forging alliances with retailers.

When contacted, RSWM joint MD Riju Jhunjhunwala declined to comment while the owner of Indus Clothing HP Singh said: "At the moment, there's no tie-up with RSWM.'' Asked if there was any possibility of a tie-up in future, he said, "I am not sure.''

If the RSWM-Indus deal goes through, RSWM would get access to a distribution network which includes standalone shops as well as multi-brand outlets. The duo could introduce other foreign brands in the country as well.

At present, Indus Clothing has a licensing agreement with Walt Disney to make and market Disney jeans targeted at the 4-14 age group. It has a similar arrangement with Italy's Rifle jeans for India. But Indus is best known for its licensing alliance with UK's Lee Cooper brand (Indus marketed it in India for more than a decade) which later went on to forge a joint venture with the Pantaloon Group after government allowed 51% foreign investment in single brand retail.

By entering into a venture with the Rs 953-crore RSWM, Indus would get access to its manufacturing capacity in Gulabpura, Banswara, Mandpam, Rishabhdev and Ringas located in Rajasthan. RSWM's met profit during FY06 was Rs 27.08 crore.