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Arvind renews interest in textile and garment industry

Signaling the revival of textile and garments industry, Arvind has announced the sale of a 10 per cent stake in its brand business subsidiary, Arvind Lifestyles, at a valuation of Rs 7,400 crores last month. This move has renewed interest in the textile and garment industry. Even after a 19-per cent rally, the market capitalisation of Arvind, currently stands at around Rs 10,800 crore.

With this deal, Arvind could be one of the few exceptions when industrialists are shying away from making new investments. Arvind’s chairman, Sanjay Lalbhai said there is enormous potential for growth in India’s textiles sector which they were trying to tap through investment in technology, brands, IPR (intellectual property rights), etc. Arvind’s major focus will continue to be investing in change rather than just setting up manufacturing capacities. Besides the said areas, Arvind will invest in technical textiles and the digital space.

Growing consumption and the government’s announcement on supporting a revival in the sector are driving optimism. The Indian textile sector is looking up. It has seen a major overhaul mainly because of several measures taken by the government for its revival, said Kavita Gupta, Textile Commissioner, Ministry of Textiles. Besides the Amended Technology Upgradation Fund Scheme (ATUFS) the government announced in January this year, a special package on garment units with production and employment-linked benefits was announced in June 2016. This will aid the textile sector immensely, Gupta said.

The financials of textiles and garment companies are improving over the past three quarters till June 2016 (see chart). In the September quarter, Arvind posted a 20 per cent increase in net profit, excluding exceptional items at Rs 78 crore. Revival of the textile and garments industry is important as it contributes 14 per cent of India’s gross domestic product (GDP), four per cent of industrial production and 13 per cent of merchandise export. The textile industry is the second-largest employer after agriculture, and employs 45 million people, including unskilled women.

 
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