Leela Group may sell garment arm to Bombay Rayon
SANJEEV CHOUDHARY & BOBY KURIAN
Economic Times, India
TIMES NEWS NETWORK[ TUESDAY, JULY 03, 2014 02:53:51 AM]
NEW DELHI/BANGALORE: Hospitality major Leela Group is expected to sell controlling stake in its garment business, Leela Scottish Lace, to Bombay Rayon Fashions Ltd (BRFL) for around Rs 450 crore. Marquee names like Ann Taylor, Banana Republic and Gap count among Leela Scottish Lace’s clients, but it’s retail giant Wal-Mart that accounts for nearly 50% of the company’s revenue
Informed sources said the deal will be finalised on Tuesday followed by a formal announcement. Rabobank would finance the deal for BRFL. ET first reported on the possibility of hotel magnate Captain C P Krishnan Nair selling stake in his original business Leela Scottish Lace on September 15, 2014. Leela Scottish Lace has a turnover of around Rs 400-450 crore. The company has a workforce of 20,000-22,000 across Bangalore, Chennai and Thiruvananthapuram. Speaking to ET, Mr Nair confirmed that his group was roping in a strategic partner who will take over the production. “It has been a great human endeavour to build a business that employees over 20,000 people. Now, we feel it is time to bring in a partner,†he added.
However, on its possible deal with BRFL, a spokesperson of Leela Lace said: “We have been receiving inquiries regarding a possible buyout of Leela Lace. We would like to put on record that these are only rumours. However, discussions are on with companies for utilisation of Leela Lace’s production facilities.†Bombay Rayon MD Prashant Aggarwal refused to comment on a possible deal with Leela group, but said: “We are not against acquisitions, if an opportunity arose.â€
BRFL, which clocked close to Rs 500 crore turnover in FY’07, has set a target of Rs 1,100 crore this year. In February, it acquired 70% stake in the UK-based DPJ Clothing, a design and marketing company, for over Rs 13 crore. BRFL’s client list includes names like Tom Tailor, DKNY, Next and Burton’s. As a prelude to the impending transaction, the Leela Group is seen segregating the real estate assets locked up in the garment, which could be utilised for hospitality related ventures in the future. For instance, sources said Leela’s garment operations would move out of the current facility at Ambattur in Chennai, which will then be used for real estate development. Money raised from stake sale is likely to be utilised for Leela group’s expansion in hospitality business.
Leela Scottish Lace precedes Mr Nair’s core hospitality business, as he logged on to the contract garment exports way back in the 60s. However, the group later identified hospitality, real estate and infrastructure as its core sectors, and was looking to sell stake in the garment business for a while.
