The Hindu Business Line : Liberty to spin off retailing venture into separate unit

THE Rs 250-crore Liberty Shoes Ltd has decided to split its manufacturing and retailing divisions into two distinct companies, following the completion of its restructuring exercise which it had kicked off last year.

Liberty Shoes Ltd has decided to float a separate subsidiary company by the name of Liberty Retail Revolutions Ltd, in which Liberty Shoes will hold the majority 51 per cent stake. The remaining 49 per cent will be held by group company, Geofin Investments Pvt Ltd and individual promoters.

Speaking to Business Line, Mr Adarsh Gupta, Executive Director, Liberty Shoes Ltd, said that an investment of Rs 12-18 crore would be infused for Liberty Retail Revolutions. Under the new company, the Liberty group proposes to set up a new chain of 24 exclusive, company-owned, company-managed stores across the country. "We hope to set up these stores within 24 months. The entire project is expected to be completed by September 2005," Mr Gupta said.

While Liberty Shoes will focus entirely on the manufacturing processes, Liberty Retail Revolutions' operations will be retail-centric.

Mr Gupta added that there would be no changes in the company's existing retail presence through exclusive franchisee and multi-brand stores. Liberty Shoes currently sell through 350 exclusive franchise stores and about 6,000 multi-brand outlets across the country.

The company had begun a restructuring exercise in mid-2003, with the objective of consolidating resources across its group companies and improving its presence in the footwear market.

As part of the restructuring, the manufacturing and sale of footwear by group company Liberty Enterprises and the Group's marketing division, was brought under the banner of Liberty Shoes Ltd on a franchise basis, against payment of annual franchise fees. Besides, Liberty Shoes Ltd acquired exclusive rights for use of the Liberty brand from Liberty Footwear Company, the owner of the brand.

Liberty Shoes claims a daily production of over 65,000 pairs of footwear. Early last year, the company had revamped its product portfolio, with the focus continuing to be on value-for-money products.

Industry estimates peg the domestic footwear market at about Rs 10,000 crore, with the unorganised sector accounting for as much as 80 per cent.

More Stories on : Restructuring | Leather

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