Financial Daily from THE HINDU group of publications
Friday, Feb 15, 2002
Financial Daily from THE HINDU group of publications Friday, Feb 15, 2002 |
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Marketing
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Retailing Corporate - Mergers & Acquisitions Zodiac hikes stake in Shoppers' Stop -- Seeks stronger retail presence, more alliances with chains Purvita Chatterjee
MUMBAI, Feb. 14 IN a bid to gain some foothold in the retailing industry, the Mumbai-based Rs 110 crore Zodiac Clothing Ltd has increased its stake in the lifestyle chain, Shoppers' Stop. The promoters of Zodiac have upped their stake from 0.95 per cent last year to 2.11 per cent this year through the private placement route. This makes it the second largest stakeholder in the company after its promoters, the Rahejas. According to Mr A.Y. Noorani, Managing Director, Zodiac Clothing Company Ltd, "The House of Zodiac, through its other private companies, had invested into Shoppers' Stop and have increased our stake this year. We see an opportunity in retail chains and are open to picking up more stake in the future." The House of Zodiac, which picked up 2.5 lakh shares last year has increased it to 5.55 lakh shares this year in the unlisted company of Shoppers' Stop Ltd. "This makes us the second largest stakeholder in the company after its promoters,'' states Mr Noorani. The C.L. Raheja promoted Shoppers' Stop presently has about 80 per cent of its equity held by its promoters followed by Zodiac and other institutional promoters like ICICI, IL&FS and JM Morgan. According to Mr. C.B. Nawalkar, Chief Financial Officer, Shoppers' Stop Ltd., "Last year Zodiac picked up a stake in the company by buying out certain institutional shares.'' Describing the company as a `cash rich' one, Mr Noorani says, "We have already invested Rs 10 crore into buying a stake in the retailing chain. Today, Zodiac is looking at strategic alliances with more such retail chains.'' Apart from Zodiac Clothing Ltd., the investments into buying out the stake have also been made by the group's other unlisted companies, including its holding company, Zodiac Pvt. Ltd. Adds Mr Noorani, "We strongly believe in the future of retailing in this country and consider such investments as a stream of income for ourselves.'' Considering the Rs 250 crore Shoppers' Stop has been reeling under losses, the investment by a clothing company with a strong brand is significant. According to analysts tracking the textile industry, such a move by Zodiac is an attempt to ensure shelf space in the retail chain considering the intense competition in the garment industry. Zodiac has also forged strategic alliances with retail chains like De Bijenkorf in Holland and Ciro Citerrio in the UK. However, the nature of the alliance is in terms of an exclusive arrangement to stock the Zodiac brand at those stores. According to Mr Noorani, there is a possibility of picking up a stake with these international chains as well. Meanwhile, Shoppers' Stop Ltd is planning to float an IPO within the next two years. The company has also introduced its private labels and is expected to make profits this year after suffering a Rs 14 crore loss last year. Shoppers' Stop has a net worth of Rs 60 crore.
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