The Hindu Business Line : Arvind Mills plans Super Stores under Megamart model

Mumbai, Oct. 1 Arvind Mills Ltd is introducing Super Stores under its Megamart retail model, Mr Karthik Krishnan, Chief Manager, Corporate Strategy, said.

To begin with, the company will set up two Super Stores of 40,000 sq ft each at Hyderabad and Chennai next year.

Large format

“While our discount store Megamart is of 5,000-7,000-sq ft area, Super Store will be a large format retail outlet of 40,000-sq ft area. The format will also act as a thrust to sell our private labels. We sell a combination of discounted apparels and private labels because we realise that selling only discounted apparel does not do justice to the overheads,” he said.

The discount will vary based on sourcing.

“If the apparel is one season old, it will have a certain discount. If it is damaged, it will have more discount,” he explained, adding that the store will help brands such as Lee, Wrangler, Arrow and Ruf & Tuf among others, to sell surplus stock.

The company currently runs 50 Megamarts and plans to set up 50 more in the next two years. The retail business contributes to one-third of Arvind Mills’ total business and is perceived as the largest growth area, according to Mr Krishnan. Most of the stores will come up in tier-II and -III cities.

To fund the expansion, the company has announced the issue of 5,06,00,000 preferential allotment of warrants for Rs 263.12 crore to promoters.

Mr Sanjay Lalbhai, Chairman & the Managing Director, said: “The company is looking forward to expand its retail and brands business and trying to manage the challenge in its core fabrics and garments business, against the backdrop of the rising rupee. There is requirement of funds for the growth of the business as well as a need to augment the net worth.”

“It is unwise to fund our brands expansion with debt capital because brands have a long gestation period. Hence, we decided to raise the money through the equity channel,” Mr Krishnan added.

The company reported revenues (net sales) of Rs 1,844 crore in the last fiscal. It’s shares closed at Rs 61.90 on Friday, up 6.36 per cent from the previous day’s close.

More Stories on : Retailing | Readymade Garments | Business Models

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