INDIA: Arvind Announces Proposal to Demerge Brands And Retail Businesses

The Board of Directors of Arvind  Limited , in their meeting held on the 28th has announced plans for demerger of its branded apparel business and the Retail business under the Megamart banner into wholly owned subsidiaries with effect from 1st April 2009. Arvind Limited one of the largest integrated textile and apparel companies in the world has significant presence across the apparel value chain starting from cotton farming to marketing and retailing leading apparel and accessories brands.

Branded apparel business which markets apparels and accessories under the brands  Arrow, Flying Machine , Newport , Excalibur and yet to be launched brands like Izod, USPA, Pierre Cardin, Sansabelt, Hart Schaffner Marx will be demerged into Arvind Lifestyle Brands Limited.

Retail business under the Megamart banner operating about 150 stores across country along with the license for world’s largest value brand Cherokee will be demerged into Arvind Retail Limited.

The demergers will be done with effect from 1st April 2009 through a court approved scheme and the company would be filing the requisite documents with appropriate authorities at the earliest. The demerger proposal is to be carried out under the Section 391 to 394 of the Companies Act along with a proposal for reduction and restructuring of share capital of Arvind Limited, Arvind Lifestyle Brands Limited , Arvind Retail Limited under Section 78, 100 to 103 of the Companies Act.

Commenting on the matter, Mr. Sanjay Lalbhai, Chairman and the Managing Director of the company said: “We are proposing the demerger of Brands and Megamart business into separate wholly owned subsidiaries to bring enhanced financial focus on these entities and look at possible alternatives for fund raising in these vehicles at an appropriate time in future”

 Enam Securities is the merchant banker advising the company on the transaction.

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