The Hindu Business Line : Arvind weighs unlocking value in select brands

Mumbai, May 13 The Lalbhai Group-owned Arvind Ltd may unlock value from some of its minor businesses such as Ruf & Tuf and Arya Omnitalk to repay debt and fund expansions, a company official told Business Line.

The debt in books, as of March 31, is Rs 1,400 crore, of which the company is looking to pay off Rs 700 crore in the next two years through sale of non-strategic assets, infusion of promoters’ money and internal accruals, said Mr Jayesh Shah, Chief Financial Officer, on the sidelines of a conference to announce the company’s rebranding strategy.

“Ruf & Tuf is a brand where we can explore possibilities by licensing it out or through royalty. Its brand strategy overlaps with that of Newport and both are profitable brands, with no overheads or brand building spends,” he said.

Newport is a Rs 50-crore brand, with an average price point of Rs 599, where as Ruf & Tuf is a marginal revenue spinner.

“But Ruf & Tuf has great brand recall and is sold through Reliance and Big Bazaar outlets,” said Mr Suresh J, Chief Executive Officer, Brands and Retail. Currently, the brand is present in 12 out of 85 Big Bazaar stores, but plans are afoot to roll it out in all the outlets.

The telecom business of the group Arya Omnitalk is a 50:50 joint venture between the Lalbhai Group and J.M. Baxi Group, It is a small business within the group and specialises in offering GPS-based fleet automation, management, walky-talky solutions for managing resources on the move, according to the company Web site.

“We had invested about Rs 25 crore in it in the beginning, but frankly speaking it is not a space we understand as our core speciality lies in textiles. We had licences in eight cities with the Baxi group and before we can decide on anything, we have to talk to them first,” an official said.

The company aims to unlock value through its land parcel in Ahmedabad of around five million sq ft in three land holdings through either partnering or outright sale.

The company also has around 35 acres of land near the new airport in Bangalore.

The promoters’ holding in the company will increase to 47 per cent by May 2009 from the current 34 per cent, on conversion of the warrants issued in 2007 worth Rs 263 crore.

In the current year, the remaining Rs 188 crore would be converted. The debt-equity ratio of the company currently is 1:1.6.

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