Both to become subsidiaries from April 1, 2009.
The homegrown integrated textile and apparel company, Arvind, has announced a demerger of its branded apparel business and the retail business under the MegaMart banner into wholly owned subsidiaries. The businesses will be counted as subsidiaries with effect from April 1, 2009.
Branded apparel business which markets apparels and accessories under the brands Arrow, Flying Machine, Newport, Excalibur and yet to be launched brands like Izod, USPA, Pierre Cardin, Sansabelt, Hart Schnaffner Marx will be demerged into Arvind Lifestyle Brands.
Retail business under the MegaMart banner operating about 150 stores across the country along with the license for world's largest value brand Cherokee will be demerged into Arvind Retail.
According to a company press release, the demergers will be done with effect from April 1, 2009 through a court approved scheme and the company would be filing the requisite documents with appropriate authorities at the earliest. The demerger proposal is to be carried out under the Section 391 to 394 of the Companies Act along with a proposal for reduction and restructuring of share capital of Arvind, Arvind Lifestyle Brands, Arvind Retail under Section 78, 100 to 103 of the Companies Act.
Commenting on the matter in the release, Sanjay Lalbhai, chairman and managing director of the company said, "We are proposing the demerger of Brands and MegaMart business into separate wholly owned subsidiaries to bring enhanced financial focus on these entities and look at possible alternatives for fund raising in these vehicles at an appropriate time in the future."
Enam Securities is the merchant banker advising the company on the transaction.
