Bombay Rayon buys Leela unit for capacity boost
(Adds details, quotes)
MUMBAI, July 4 (Reuters) - Textile firm Bombay Rayon Fashions Ltd. (BRFL.BO) said on Wednesday it acquired garment maker Leela Scottish Lace for 1.55 billion rupees in cash, to expand its higher margin apparel business.
Leela Scottish Lace, part of a group that owns Hotel Leelaventure Ltd. (HTLE.BO), has an annual revenue of about 4 billion rupees and makes 12 million pieces of garments annually, Bombay Rayon Managing Director Prashant Agarwal said.
The acquisition, through a subsidiary, would boost consolidated revenue by 2 billion rupees to 13 billion rupees in 2007/08, he said.
"It is a profitable, very well managed business with large clients," he said. "It expands our apparel capacity significantly."
Leela sells half its production to Wal-Mart (WMT.N).
"We have already paid a quarter of the deal value and plan to raise foreign debt to settle the balance within 45 days," Agarwal said.
Leela has 18 plants spread across Bangalore, Chennai, Kochi and Thiruvananthapuram and employs 16,000. As part of the deal Bombay Rayon would get five plants with an option to buy another six. The remaining seven are leased, Agarwal said.
Bombay Rayon by itself is raising capacity from 18 million garments a year to 45 million and hopes to reach 90 million by December 2008.
It had bought 70 percent of UK-based DPJ Clothing for 1.54 million pound sterling in February to strengthen its distribution in Europe. It sells to Tom Tailor, DKNY and Liz Clairborne.
Shares in Bombay Rayon were down 1.3 percent at 252.05 rupees in the Mumbai market.
((Reporting by Narayanan Somasundaram, editing by S. Srinivasan; Reuters Messaging; narayanan.somasundaram.reuters.com@reuters.net; +91 22 6636 9068)) Keywords: BOMBAY LEELA/
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