Mudra Lifestyle circling overseas companies

MUMBAI: Mudra Lifestyle, which makes fashion fabrics and garments, is looking at buying out overseas firms with revenues of $30-50 million to expand its operations.

The Mudra Group-promoted company is ready to dilute its stake to fund the acquisitions. The company is also open to private-equity funding, official sources said.

Murarilal Agarwal, chairman and managing director, Mudra Lifestyle, told to DNA Money: “Inorganic growth is always in our plans and whenever the company finds the right target, it will take the necessary course but nothing is happening at this stage.”

It was learnt that Reliance Retail will be sourcing wide range of garments in men’s and women’s wear sections from Mudra Lifestyle for sell in its retail outlets across the country.  Even Westside, the retail outlet of Tata, has approached the firm to supply garments.

Meanwhile, Mudra Lifstyle is looking to set up a new plant for making Spandex yarn of about Rs 300 crore. It will be looking to raise funds via an FCCB or a GDR to the tune or Rs 200 crore. It also plans to issue warrants worth Rs 360 million to promoters.

Spandex yarn is used in making fabrics stretch and in India there is no plant that manufactures Spandex yarn. The consumption and import of Spandex yarn is around 800,000 tonnes per annum.

The new plant, with capacity of around 3,000 tonnes per annum, will come up in Uttrakhand or Himachal Pradesh either directly as a division of the company or through a subsidiary as may be decided by the finance committee of the board.

Brokerage firm Prime Broking wrote in a recent report that Mudra’s margins will continue to remain clouded by rupee movements and any delay in execution of the expansion is a risk. 

At present, 65% of its total sales are fabrics and 35% garments. Going forward, it is looking at sales in the ratio of 50:50 for fabrics and garments. The company also recently received a domestic order of Rs 20 crore from institutional buyers. The order is to be executed in four months from the receipt of the order.

Mudra Lifestyle has 177 automatic looms producing approximately 10.62 million metre of woven fabrics per annum, 700 sewing machines with production capacity of 3.15 million garments per annum, and processing capacity of 80,000 metres per day. Mudra Lifestyle was established by the Agarwals as Bombay Fine Fabrics Pvt Ltd in 1997 and forms a part of the Mudra Group.

The company started operations in 2002 and have since then been engaged in fabric weaving, processing and garmenting.

It sells fabric under its own brand ‘Mudra’ in the domestic market and to garment exporters. It forayed into the garments business in the past three years and is currently manufacturing men’s shirts, men’s trousers and shirts as well as ladies shirts and trousers and kids wear. 

Its key customers in the garments business are Madura garments (supply for brands such as Allen Solly, Peter England and Element), Raymond and Arvind Mills (for their brands such as Wrangler, Ex-Calibur). Within the country, fabric is sold through its own dealer network of 75 dealers.

r_mithun@dnaindia.net