New Delhi: J.D.S. Apparels Pvt. Ltd, the company that owns the Ritu Wears chain of department stores, is in talks with three foreign private equity players to sell between a 10% and 20% stake in the company to fund expansion, according to Sanjay Sahni, managing director, and Samir Sahni, director, J.D.S.Apparels.
The Sahnis declined to name the three companies, but said one of them was based in Singapore. They added that a deal would be announced in the next two months, but did not specify the valuation of Ritu Wears. Resurgent India Ltd, which is advising the company in the stake sale, puts the company’s valuations at between Rs180 crore and Rs200 crore.
Ritu Wears will use the money raised from the sale to fund expansions into standalone apparel stores for men, women and children, and open a chain of electronic stores in North and Central India, said Sanjay Sahni.
Ritu Wears currently owns six department stores in New Delhi and its suburbs, and plans to invest about Rs100 crore to open up to 20 more stores by 2010, said Sanjay Sahni. He added that the company could consider an initial public offering in the next two years to fund its expansion.
J.D.S. Apparels closed 2006-07 with revenues of Rs100 crore; the company hopes to increase this to Rs400 crore by 2010.
Jyoti Prakash Gadia of Resurgent India said the company had earlier held talks with India’s largest listed retailer, Pantaloon Retail (India) Ltd, for a possible stake sale, but added that these hadn’t resulted in anything.
Apparel and accessories is the largest segment of India’s $12.4 billion organized retail business and it accounts for about 39% of the country’s booming modern retailing, according to India Retail Report 2007, a study authored by various Indian and foreign retail and real estate consulting firms. In September last year, Actis bought a controlling stake in the southern Nilgiri Dairy Farm, which runs one of India’s oldest supermarket chains, for about Rs300 crore. In December, US-based equity firm Argonaut and India’s UTI Ventures jointly purchased about 18% stake in apparel retailer Koutons Retail India Ltd for Rs112 crore.