The Hindu Business Line : `We stay committed to branded apparel biz'

THE Sanjay Lalbhai-managed Arvind Mills said it remains committed to Arvind Brands Ltd, an associate company and a marketer of leading apparel brands, even though it did not spell out a decision on future investments into the latter.

"Branded garment business has a huge potential in India and we believe Arvind Brands has strong franchise brands that enjoy tremendous customer patronage. Our commitment to Arvind Brands continues," Mr Jayesh Shah, Chief Financial Officer (CFO) of Arvind Mills, said. Arvind Brands ceased to be a subsidiary of the Lalbhai-run conglomerate when Arvind Mills divested 54 per cent stake to ICICI Ventures earlier this year.

"It will be a board decision if and when the situation arises," Mr Shah said, while replying to a query whether the company would allow further equity dilution in Arvind Brands to help its former subsidiary raise the required capital in future. To another specific query whether Arvind Mills would infuse more funds into the associate company, Mr Shah quipped: "Again, decisions on strategic investments in our associate companies are taken by the Board of Directors."

"Investments in Arvind Brands is an aspect of our overall strategic long term business plan. As per the balance sheet ended March 30, 2004, investment by Arvind Mills in the equity of Arvind Brands stood at Rs 87.03 crore," Mr Shah said. At the time of divesting majority stake to ICICI, Arvind Mills, which currently holds 46 per cent stake, had stated that it had the option to buy back five per cent at a future date.

Arvind Brands utilised the additional cash flow from this transaction to de-leverage its balance sheet. However, speculation is rife whether Arvind Mills would dilute its equity further in the associate company as it looks for fresh capital. Arvind Brands, with a turnover of over Rs 250 crore, markets some of the leading brands such as Arrow, Lee and Wrangler.

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