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Madura Garments goes to Indian Rayon - Views on News from Equitymaster
 
 
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  • Dec 22, 1999

    Madura Garments goes to Indian Rayon

    Indian Rayon has bagged the garments business of Madura Coats. The deal has been done at Rs.2.36 bn.

    Indian Rayon thus becomes the owner/licensee for India of the prominent brands Louis Phillipe, Van Heusen, Allen Solly, Byford, Peter England and San Frisco. A fully owned overseas subsidiary of Indian Rayon, Aditya Vikram Global Trading House will be acquiring the exclusive brand rights for various countries in SAARC and Middle East countries from Coats Viyella plc for $ 10.8 m.

    At present, Indian Rayon has three businesses: viscose filament yarn, carbon black and insulators. The cement business of the company was amalgamated with Grasim during the last financial year. Along with that, Grasim took up Rs. 4.37 bn of debt from the books of Indian Rayon as cement related debt. Besides, Indian Rayon has closed down its sea water magnesia business. It will be writing off Rs. 3 bn in the current year on account of this division from its past reserves. In FY2000 it is expected to report a turnover in the range of Rs. 12 bn and a net profit in the range of Rs. 1 bn without taking into account the turnover of the newly acquired garments division.

    Madura Coats, on its part, is likely to focus only on its thread and its industrial fabrics business. There are rumours that the textile mill in Madurai would be closed after paying off a hefty VRS to its workers. Any surplus could be used to repay its borrowings. The company has long term borrowings of Rs.720 m of which the foreign currency borrowings amount to Rs.600 m.

    Coats and Viyella had earlier announced a de–merger in the UK, which had run into regulatory problems. Madura Coats is a 51% subsidiary of the former and the brands of Viyella plc were licenced to the company till 2004.

     

     

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