Kewal Kiran Clothing Ltd (KKCL), owner of readymade-garment brands like Killer, Lawman, Easies, Integriti and K-Lounge, is likely to acquire a mid-size apparel brand.
MUMBAI: Kewal Kiran Clothing Ltd (KKCL), owner of readymade-garment brands like Killer, Lawman, Easies, Integriti and K-Lounge, is likely to acquire a mid-size apparel brand.
According to sources, the company plans to acquire a brand in the kids’ wear segment where it has no presence yet. The acquisition would be funded through a combination of internal accruals and debt and if required, equity placement, the sources said.
The company is also looking to add a design house or become an exclusive licensee of an international brand. Market sources said it is also looking at forging a joint venture with a foreign player.
However, Vikrant Gandhi, chief financial officer, KKCL, told DNA Money, “I don’t want to comment anything on acquisition or on foreign JV. At the appropriate time, company would make an official announcement and will inform the stock exchanges.”
Gandhi agreed, though, that the rupee’s appreciation was a concern for the textile industry, particularly apparel, what with more imported brands likely to become available in the country with cheaper pricing.
At present, KKCL earns 5% of its total revenue from exports; its K-Lounge setup contributes 20% and the flagship denim brand Killer brings in about 50%.
The company has introduced three men’s apparel brands focused on different age groups in the last few years.
Analyst Sangeeta Tripathi at Anand Rathi said in a note to clients on September 24 that the well-diversified brand portfolio enables it to cater to different market segments and different price ranges, thereby de-risking dependence on any single brand.
Kewal Kiran, a 100% integrated garment manufacturer from manufacturing to retailing markets its products through national chain stores, multi-brand outlets, its flagship ‘K Lounge’ stores, and factory outlets.
The company is expanding its exclusive K-Lounge stores to 143 by the end of December from 74 stores currently. KKCL operates these stores under three formats — company owned and operated, company leased and franchisee operated, franchisee leased and operated.
Currently, around 53% of the company’s retail outlets are concentrated in the western region.
Following the expansion, the West would have 36% of the outlets, while North would have 32%, South (22%) and East (11%).
The company has manufacturing facilities in Mumbai and Gujarat with a capacity to manufacture 3 million pieces annually, which it plans to raise to 4 million by FY08.
India’s retail sector contributes 35% to its GDP, according to AT Kearney’s 2006 Global Development Index. At present, organised retail contributes 3% to total retail spend and is expected to double by 2010. Thus, in the next five years, a 25% CAGR is expected in organised retailing.
According to Delhi-based retail consultancy Technopak, retail sales are likely to touch $430 billion by 2010 from $300 billion currently, even as the share of modern retailers rises from just 3% now to 16-18%.
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