Indian Rayon pockets Madura Garments

The A V Birla group''s I
23 December 1999

The A V Birla group has concluded the deal with Coats Viyella plc of the UK at Rs 236.23 crore. With that, from 1 January 2000, Indian  Rayon will own the rights to six Coats Viyella brands -- Louis Philippe, Van Heusen, Allen Solly, Byford, Peter England and San Frisco.()

The deal has been structured in such a way that Indian Rayon will acquire Madura Garments as a going concern with all employees, brand licences, and distribution and manufacturing networks for Rs 189.23 crore, along with the brand rights for India.

Simultaneously, in a separate transaction, Aditya Vikram Birla Trading House, an overseas company of the Aditya Birla group, has bought the exclusive brand rights for the South Asian and the Middle East countries from Coats Viyella for $10.8 million (Rs 47 crore).

Looking or leadership Says Kumar Mangalam Birla, chairman of the Aditya Birla group, "We believe the acquisition of Madura Garments will greatly enhance value for Indian Rayon shareholders. The apparels business has been identified as one in which in which we wanted to have a leadership position through a focused entry into the high-value, ready-to-wear segment. This acquisition as well as the acquisition of certain overseas brand rights has catapulted the group to the top of the league in the branded apparels market."

Indian Rayon will probably finance this acquisition mainly through its current cash surplus and internal accruals. But, according to Adesh Gupta, the company's chief financial officer, "In view of the growth opportunities and current low interest rate scenario, the company may consider raising market borrowings to augment internal resources."

All of Madura Garments' employees, except its president George Zacharias, will be transferred, with the business, to Indian Rayon. They have been assured continuity of service on existing terms and conditions. Zacharias is moving on to a London-based responsibility with Coats Viyella.()