Celebrity Fashions is scouting for a strategic investor

Celebrity Fashions is planning to invite a strategic investor for its bottoms division which is being hived off as Celebrity Clothing

Celebrity Fashions Ltd (CFL), an Indian garment exporter and manufacturer of trousers, is looking at raising equity funds for its export bottoms division business through a strategic investor. This move will take place immediately after the company completes the restructuring that is underway. A few days back, the company announced that it is going to hive off ‘Indian Terrain’, a men’s apparel brand—currently a division of the company—into an independent entity. CFL’s bottoms division will be merged into its unit Celebrity Clothing Ltd (CCL). The company is looking to sell the promoter’s stake in CCL to a strategic investor.

“We are looking at raising equity funds for our export bottoms division business from a strategic investor who will bring in export business or who will benefit from our production capacity. We are looking at raising the equity funds in three months,” said S Surya Narayanan, executive director, CFL.

The company has signed up SBI Capital Markets Ltd (SBI Caps) for raising equity funds for the export bottoms business and is planning to give maximum 49% stake to a strategic investor. After the de-merger of Indian Terrain and hiving off of the bottoms division, the tops manufacturing and exports division will remain with CFL. The restructuring exercise is being carried out by PricewaterhouseCoopers. The restructuring will bring clearer focus to the whole business.

According to trade reports, the Indian Terrain brand has enjoyed a 20% growth last year. The company is looking to expand aggressively with its Indian Terrain brand and is planning to add 20 more exclusive stores to its existing exclusive 45 outlets. According to the company, 40% of its revenues come from exclusive brand outlets. The new stores will be in Ahmednagar, Tiruchirapalli, Visakhapatnam, Bikaner, Jodhpur and outlets in Sikkim. The company feels that the Indian Terrian brand could grow bigger than the export business of CCL, which currently stands at around Rs200 crore.

After the entry of the potential investor in CCL’s business, the company might list the subsidiary as a separate entity in the stock market. “Listing of CCL can happen in the future which depends on the investor and the growth of the business which may happen after a couple of years from now,” said Mr Narayanan.

Last quarter, (October 2009- December 2009), the company incurred a loss of Rs5.14 crore compared to a loss of Rs37.68 crore in October 2008-December 2008. The loss fell by Rs 32.54 crore, on a quarter-on-quarter basis, with almost the same net sales (Rs66.82 crore in October 2009- December 2009 and Rs65.07 crore in October 2008- December 2008) over the period.

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