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M. Somasekhar

Exploring franchisee model for chain of outlets

Hyderabad , Dec. 15

The contagious retail bug seems to have bitten another industry major. This time, it's the Mumbai-based Maxwell Industries Ltd, which is firming up plans to foray into the undergarment retail chain segment.

Giving details of the company's retail foray, Mr Kapil J. Pathare, Director, said it would have two formats — exclusive stores for its lingerie brand — Lovable, and others (Combo type) showcasing its range of undergarments and jeans.

Maxwell Industries, part of the Rs 350-crore turnover VIP Group, wants to invest Rs 10 crore to set up a chain of 100-125 exclusive stores of Lovable across the country. Maxwell Industries, had bought over the lingerie brand from the US company Sara Lee in late 2005.

The first store in the Combo format would be launched in Mumbai early 2007. "We are also talking to international fashion brands to bring them to India, through these retail outlets," Mr Pathare told Business Line here.

The company already has 15 exclusive outlets for its Live-In jeans in Kerala and Bangalore and gained experience which can be applied to the retail foray. "We are exploring the franchisee model for the chain of outlets. One strategy is to partner promoters of malls in various cities," he said.

Merger of group cos

The retail entry will gather momentum once the merger of the Group companies is completed around February 2007. At present the Group has Maxwell Industries, Microtex India and Lovable Lingerie Pvt Ltd.

The process of merging Microtex India and Lovable Lingerie with Maxwell Industries is at an advanced stage. It has got the nod from the BSE and is awaiting the final nod from the High Court in Mumbai, said Mr Pathare, who was here in connection with its VIP Chaddi Pe Gaddi offer, whereby four cars were given away to the winners. The company is also taking up an expansion programme for which it wants to raise about Rs 300 crore through a mix of debt and equity. One move of divesting 14.5 per cent equity to Reliance Capital a few months ago fetched Rs 45 crore, he said.

The company has units at Bangalore and Coimbatore. The Coimbatore plant capacity is being doubled from 25,000 spindles to 50,000 spindles per annum.

A new stitching factory, near Thingalur at Tirupur, would be set up with an investment of Rs 20 crore, Mr Pathare said.

Maxwell Industries is also pinning its hopes on the Technology Upgradation Fund (TUF) for funds in addition to investments from Reliance Capital and internal accruals, while firming up plans for funds from other sources, he added.

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