The Hindu Business Line : Arvind Brands forms JV with VF Corporation

New venture
Arvind Fashions to transfer all its employees to the new venture
While Arvind Brands will hold 40% equity in the venture, VF Corporation will hold 60%
New company to handle designing, sourcing and marketing of the existing licensed brands

Bangalore , Sept. 1

Arvind Brands, part of Arvind Mills, and the US-based branded lifestyle apparel maker the $7-billion VF Corporation, have formed a joint venture for marketing and distributing VF branded products in India.

Till now, Arvind Fashions, another subsidiary of Arvind Mills, was marketing VF branded products — Lee, Wrangler, Nautica, Jansport and Kipling — under a licensing arrangement with the US company, which is the world's largest branded apparel maker.

With the formation of the new joint venture, Arvind Fashions will transfer all the 180 employees, assets as well as the designing, sourcing and marketing and the existing licence from VF to the new venture, VF Arvind Brands Pvt Ltd.

Equity Stake

While Arvind Brands will hold 40 per cent equity in the venture, VF Corporation will pay $33 million to Arvind Fashions for 60 per cent stake in the new company.

VF's wholesale business in India is around $40 million annually and is expected to grow over 25 per cent per year excluding the addition of other VF brands.

The new company will handle the designing, sourcing and marketing of the existing licensed brands and in the future may add a few more brands belonging to VF Corporation.

The retailing and the stores infrastructure will continue to be held by Arvind.

While Mr Darshan Mehta, currently the President of Arvind Brands, will be the new Chief Executive Officer of the new company, Mr Eric Wiseman, the current President and the Chief Operating Officer of VF Corporation, will be the new Chairman of the company. The five-member board will have three representatives from VF Corporation and the rest from Arvind Brands.

Future Growth

"The strength of Arvind's distribution gives us a clear entry into one of the world's most dynamic and fastest growing markets," Mr Mackey J. McDonald, Chairman and Chief Executive Officer of VF Corporation, said.

"With its rapidly expanding economy, growing retail base and favourable demographic characteristics, India presents a source of enormous future growth for our brands. This move underscores our commitment to leveraging VF's powerful portfolio of brands to capture new growth opportunities in expanding markets, " he said. "The branded apparel market in India is approximately $4.4 billion and continues to grow as consumers are becoming increasingly brand and fashion conscious. There is a tremendous opportunity to market VF's popular lifestyle brands and grow VF's business in India," Mr Mehta said.

More Stories on : Brands | Alliances & Joint Ventures | Readymade Garments

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page