Retail bug bites Orient Crafts; to form JV or franchise

New Delhi, Dec 20 (UNI) Garment export major Orient Crafts Ltd (OCL) is planning to foray into the lucrative retail apparel sector through JVs or franchise route, even as it will invest Rs 400 crore over the next three to four years for expansion.

''OCL being an export-oriented firm, has now put its eyes on the domestic market and is in talks with four comparies abroad for a joint venture company or franchise agreement. We have recently got into an exclusive licencing agreement with 1.5 bilion dollar European fashion company S Oliver...we want to use this route to get into retail,'' OCL Chairman and Managing Director Sudhir Dhingra told reporters here today.

OCL will set up two retail stores -- one each in Delhi and Mumbai -- under the franchise agreement. At present, S Oliver does not hold any stake in OCL but will become an equity holder in three years, according to the agreement.

The current asset base of the company stands at Rs 200 crore which will be raised to Rs 600 crore after the expansion which includes ramping the production capacity of OCL to 1,50,000 garments per day from the current level of 60,000 units per day and building infrastructure.

OCL with a strength of 20 manufacturing facilities across India will also set up a 10-acre garment unit in Hyderabad by 2008.

Mr Dhingra said the company will file the draft red herring prospectus (DHRP) with market regulator SEBI in the next couple of weeks for raising Rs 300 crore though an initial public offering (IPO) next year, by which it would divest 25 per cent stake.

''We will raise Rs 200 crore through our IPO, Rs 70 crore through internal accruals and Rs 130 crore through debts,'' he said.

The Rs 750-crore-company aims to touch an export target of Rs 1,300 crore in the next two years. It has already put in Rs 26.8 crore in equity and some advances for its Gurgaon SEZ for which it has acquired 460 acres of land. ''We plan to go up to 700 acres for our textile special economic zone (SEZ) in Gurgaon.'' The company last month said it will invest Rs 2,000 crore into the Gurgaon SEZ in three phases and Rs 500 crore would be invested in the first phase through internal accruals.

The first phase is to be completed by the end of 2007 while the whole project will be finished by January 2010.

OCL has an international clientele including Gap, Banana Republic, Tommy Hilfiger, Marks&Spencer and Ralph Lauren, among others.

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