Arvind Lifestyle Brands (ALBL), a wholly-owned subsidiary of Arvind Fashions (AFL), India’s leading casual and denim player, has signed definitive agreements for strategic sale of assets of its Unlimited retail business to V-Mart Retail in an all-cash transaction.Unlimited operates a chain of 74 value fashion retail stores across South and West India and retails fashion apparel and accessories for men, women and children at affordable prices.
As part of the transaction, ALBL will sell assets of the 74 retail stores, warehouses, inventory and the 'Unlimited' brand to V-Mart at its book value.ALBL would receive cash consideration estimated at about Rs 1,500 million upon the closure of transaction and thus, will fully recover the capital employed in the business.
In addition, there are contingent payments to be received, based on certain milestones achieved by V-Mart over next few years for these stores, post the acquisition. The Company intends to utilise the amount so received for repayment of debt and for working capital purposes.
This sale will help AFL achieve its objective of focusing on its 6 high conviction brands which include US Polo Assn., Tommy Hilfiger, Arrow, Flying Machine, Calvin Klein and Sephora. This also significantly completes the process of reset that AFL had embarked on, to consolidate and sharpen its portfolio as well as to strengthen its balance sheet.
Speaking on this divestment, Shailesh Chaturvedi, Chief Executive Officer, Arvind Fashions, said, "We are delighted to find a strong home in V-Mart for Unlimited. We had created a scalable format with significant product capabilities in value retail, which has a large potential. However, in line with our strategy of focusing on our 6 high conviction brands, we decided to exit the business. This would help us put capital behind growing our six focus brands, helping generate significant shareholder value."
Commenting on the transaction, Lalit Agarwal, Managing Director, V-Mart Retail said, "We are proud to bring the 'Unlimited' stores within the umbrella of V-Mart family. The business had been turned around by Arvind Fashions, and fits well with our strategy of expanding our regional presence as well as adding capabilities in select categories.
Our combined strengths - VMart's expertise in creating a scalable and profitable value fashion retailing business model, and Unlimited’s large presence in South India with strong fashion mindset and delivering a differentiated store experience to customers, provides a long runway for sustained stakeholder value creation & will allow us to gain strategic insights and presence in this very attractive market."
Shares of the company declined Rs 4.80, or 2.38%, to settle at Rs 197.10. The total volume of shares traded was 494,957 at the BSE (Friday).
