The Hindu Business Line : Celebrity Fashions to sell Chennai facility

Coimbatore, Feb. 22 The rising rupee , which has hit exporters hard, seems to have taken its toll on a men’s wear manufacturer, Celebrity Fashions Ltd (CFL). The company sells under the brand name ‘Indian Terrain’ and is a supplier to some of the well-known labels abroad, including Gap and Armani Jeans. It has decided to turn its focus on the domestic market rather than on exports.

The company has also decided to sell its manufacturing facility at the SIPCOT Industrial Park at Irungattukottai near Chennai and relocate the manufacturing facility at Pallikaranai near Chennai as part of its restructuring.

In a communication to the NSE on Friday, CFL said that the board of directors, at its meeting held on February 22, approved the sale of the undertaking situated at SIPCOT Industrial Park, Irrungattukottai, Sriperumbudur, on a ‘Slump Sale basis’.

The board also decided to relocate the Pallikaranai manufacturing unit and sell that land and building. It also gave its clearance to “relocate other manufacturing units in any of the existing manufacturing units and sell/dispose of the company’s land and building as they deem appropriate”.

Developing focus

The company said the decision to sell the undertaking, subject to the approval of the shareholders, banks and SIPCOT, was to enable it to “focus significantly on the domestic branded market as against the current focus on exports, due to the challenging business environment on account of the rupee appreciation and international competition”.

It further said the sale proceeds would also help the “company to repay the term loans in full, availed for constructing the plant as well as the working capital loan availed from banks”.

It was in July last year that the company announced that the board of directors at the meeting held on July 27, 2007 accorded their in-principle approval for the proposal of segregating the export division of the company into a separate company.

In the first half of current fiscal, CFL had a turnover of Rs 168.64 crore but sustained a net loss of Rs 7.78 crore. In the third quarter this year, net sales was Rs 86.57 crore and net loss amounted to Rs 1.27 crore.

Apart from the promoters, other major investors in CFL are New Vernon Pvt Equity (19.07 per cent), Bennet, Coleman and Co (7.38 per cent) and Reliance Capital Ltd (6.50 per cent) as at the end of December 31, 2007.

More Stories on : Readymade Garments | Restructuring

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