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Storied American private equity investor TPG has kicked off a process to sell India’s sixth-largest wholesale and retail chain, Vishal Mega Mart, in a deal that could value the company at over Rs 1,500 crore. TPG has appointed Kotak Mahindra Capital as a financial adviser to help in the sale of the asset it acquired seven years ago.
TPG owns the wholesale unit of Vishal Mega Mart, while the front-end stores are run by Chennai-based Shriram Group. Vishal Mega Mart operates over 350 stores in the country and had clocked consolidated sales of Rs 3,000 crore in fiscal 2016.
Vishal Mega Mart’s annual earnings before ebitda was Rs 70 crores. TPG is expecting Vishal Mega Mart to be valued at about Rs 1,500 crore, giving it a multiple of 20 times its ebidta. Avenue Supermarts, currently, trades at a valuation of 85 times its fiscal 2017 ebidta. But Vishal Mega Mart, which has struggled on profitability front, is unlikely to attract similar valuation multiples. As per reports, the Vishal Mega Mart deal could fetch between 20-25 times of ebitda putting it in Rs 1,500-2,000-crore valuation bracket.
The wholesale and retail segment in India has been witnessing consolidation as players look to push up scale and efficiency. Last week, Future Retail announced the buyout of HyperCity, a chain of 19 big-format stores, for Rs 655 crore, to increase its presence in the country. Some time ago, Radhakishan Damani, founder of D-Mart supermarkets, took control of Bombay Stores, a chain of department outlets.
Indian Handicrafts and Gifts Fair (IHGF) opened in New Delhi, October 12, 2017.
It has been organized by the Export Promotion Council of Handicrafts (EPCH). More than 3000 participants are displaying their products. EPCH has enabled small artisans with market linkage opportunities at the fair.
The handicraft sector is one of the largest employment providers in the country, with most micro, small and medium industries being engaged in handicrafts and allied sectors. The handicraft sector generates a large number of jobs with relatively much lower investments compared to large industry sectors.
There is a need for coordinated efforts among stakeholders in the handicraft sector to increase the market share of India in global handicraft exports. It currently stands at a meager five per cent despite the consumer demand showing an upward trend over a period of time.
Mudra extends business financing benefits to more than nine crore of micro level entrepreneurs of the country.
The second day of IHGF added glamour with business with the organisation of a fashion show on the products being displayed by the participants.
The companies whose products were modeled on the ramps included bags from Veva Fashion, Jaipur, leather bags from MB Exports, Rajasthan, jewelry from FDDI Footwear Institute, Noida, and dresses from the north eastern region.
Buyers from different countries were also seen busy doing business with exhibitors on the second day of the fair.
IHGF, the world’s largest handicrafts and gifts fair, is being held in Greater Noida, October 12 to 16, 2017.
A large number of overseas buyers are present at the fair. About 2980 exhibitors of home, lifestyle, fashion, textiles and furniture are participating. Over 6000 buyers from 110 countries are visiting the fair. Special attractions of this fair include a designer forum and recycled products.
The handicraft sector in India has witnessed a growth of 13.15 per cent in 2016-17 compared to the previous year.
EPCH supports the education of children of artisans through open schools which includes tuition fees and other study material. Seventy-five per cent of the entire expenditure will be borne by EPCH and 25 per cent by member exporters sponsoring the study of the children.
EPCH has a design register scheme under which member exporters can register their design without any hassle. EPCH design services are expected to augment the exports of handicrafts from the country and ultimately increase employment opportunities for artisans.
EPCH is providing full support through its integrated program of development of handicrafts and handloom of the north east which includes design, market and skill development.
A initiative is being taken for foreign direct investment in the handicrafts sector and joint venture opportunities for buyers and sellers i.e. both exporters and importers. Over 100 stakeholders have shown keen interest in the sector. A very large amount of investment from the US and Europe is already taking place in the handicrafts sector in China, South Korea, and Vietnam, which are competitors of India. This initiative will give opportunities to overseas buyers to bring technical knowhow, investment and their marketing network to form joint ventures for promoting Indian handicrafts in the world market. This is expected to give exports of handicrafts a new dimension.
Amazon has signed an MoU with the Telangana Department of Handlooms and Textiles to help handloom clusters in Warangal, Pochampally. As the number of weavers has increased over the years sales haven’t gone up proportionally. Warangal has been making durries that use cotton and jute for 40 years. Durries have kalamkari patterns on them. Warangal durries or rugs have been famous for many reasons such as they are made using vegetable colours, and are washed in flowing water after the printing process.
Pitta Ramulu was also the first weaver to get a national award, he had won the ‘National Handloom Award’ for 2015. Ramulu’s durries can be now found on Amazon.Ramulu is hoping the number of orders increases. Orders haven’t picked up much. So far, he has got a few orders through Amazon.
As per the Handloom Export Promotion Council, Warangal has been a long-standing centre for durries and 80 per cent of the handwoven durries sold in European and American markets are woven in India. In March 2016, the Telangana State Handicrafts Development Corporation tied up with Amazon India to sell local hand-made ‘Golkonda’ handicraft products. Many weavers are also registered on the India Handmade Bazaar, a portal sponsored by the Government of India, which also sells Indian handlooms and handicrafts.
This is only one amongst the many initiatives that have been picked up to get more handicrafts and handlooms online and available to a larger group of people, including the Tribal Cooperative Marketing Development Federation of India Limited, a PSU under the Ministry of Tribal Affairs.
Currently, there are about 24 weaver associations and societies who have registered on Amazon to sell their wares.
With cotton being one of the top polluting industries, a world first Australian technology could contribute a positive change in the global $500 billion textile and fashion markets. Australian company Nanollose has raised $5,000,000 from investors, with ambitions to commercialise its sustainable fibre technology after an IPO on the Australian Securities Exchange expected for October 18.
Nanollose CEO Alfie Germano says this mark an exciting time for the company, with its world first Plant-Free Cellulose fibre set to potentially become a sustainable alternative to commonly used but environmentally damaging fibres such as cotton.
Currently, cellulose is obtained from plant sources like cotton, wood and bamboo, with the supply chains and procurement ecosystems of these industries raising ever-growing environmental concerns.
Germano who has held multiple VP positions at some of the largest global apparel brands including Gap recently stated that the funds will be used to accelerate the development of the company’s fibre technologies and build production supply chains with key partners, who will license and grow the fibre. The funds will accelerate the development and get a point where it could offer the fibre as a sustainable alternative to that of fibres derived from cotton and wood. He further adds that progressive brands and companies are starting to facilitate this new shift by involving themselves deeper in the supply chain and searching for feasible, sustainable long-term alternatives, and wants to be part of the solution. The reason is to feed sustainable alternative into the global industries with little to no retrofitting to existing machinery or processes.
Germano’s first target is the $500 billion global textile industry, and says there is increasing urgency from brands, retailers and manufacturers to seek and cultivate alternative fibre resources.
Average synthetic fiber prices increased sharply in September. Global synthetic fiber prices increased 17.5 per cent year on year and by 5.8 per cent over the prior month. Contributors to the price increases included constraints on supply, a temporary spike in oil prices and disruption in intermediates product resulting from hurricanes, and continued Chinese crackdown on violations on environmental regulations.
Although oil prices have already settled down from their hurricane-related increases, delays in expansion of resin capacity in the US and Europe have caused concern over polyester supply in both the short and the long term. In Asia, the largest manufacturing region for synthetic fibers, the price increase was felt most intensely. Prices increased in September by 24 per cent year-over-year and 9.4 per cent month-over-month. The biggest increase was in the polyester filament area. Nylon textile filament costs were similarly affected, though not as dramatically. Spandex, viscose and acrylic staple prices remained relatively stable. Asian synthetic fiber prices remain more than 20 per cent below the global average.
In the US, prices rose by 6.9 per cent compared to September last year and three per cent from August. In Europe, prices rose by 18.2 per cent year-over-year and two per cent from last month.
Levi Strauss has recorded seven per cent revenue increase in the third quarter. Direct sales to consumers grew by 16 per cent and wholesale revenue by four per cent. Revenue increases in the year’s first two quarters were four per cent and six per cent. Levi Strauss is the owner of brands Levi’s and Dockers.
The group also reported a 180 base-point increase in its gross margin. However, due to unfavorable exchange rate adjustments and a series of equity operations, Levi Strauss' net income was down ten per cent. The group’s EBIT was up one per cent compared to last year.
Despite the changes affecting retail, Levi Strauss has achieved profitable growth and is leveraging the strength of its diversified business and the confidence it has in its brands. Its advertising and media investment in the fourth quarter is growing exponentially. The launch of the jacket developed with Google, and the initiatives celebrating the 50th anniversary of the Trucker Jacket, reinterpreted by 50 celebrities, artists and influencers from around the world, will add great energy to the year-end for Levi’s.
The group has revised its guidance for the fiscal year 2017 as a whole, currently forecasting a growth between five per cent and six per cent.
Leather garment manufacturer Lanka Leather Fashion is committed to promoting sustainability. Not content to only negate its overall impact, LLF improves its environmental performance year-on-year, and has even managed to achieve a notable 16 per cent reduction on its carbon footprint with a 11 per cent increase in production as well.
Founded in 1981, Lanka Leather supplies to prominent high-street fashion brands such as Hugo Boss, Gerry Weber, Michael Kors and Taleco. The organisation’s leadership in reducing and compensating for its environmental impact is getting much deserved attention from key decision makers and stakeholders in its global supply chains.
The manufacturer holds the title of Carbon Neutral for the third year in a row. This was awarded by UK based Natural Capital Partners. Carbon Consulting Company has conducted an in-depth assessment of LLF’s greenhouse gas emissions. LLF then invested in a renewable energy project in Sri Lanka to obtain registered carbon credits through Natural Capital Partners.
High quality, sustained volumes and competitive pricing have been key factors contributing to the success of Sri Lanka’s footwear and leather products industry. High quality Sri Lankan leather goods in the range of leather gloves, travel bags, back packs, ladies’ handbags, jackets and small leather goods cater to niche international markets.
Indian textile exporters are facing difficult times. They have been facing subdued demand trends in the key importing countries as well as intense competitive pressures from nations such as Bangladesh and Vietnam. In addition, unfavorable currency movements and high raw material prices as well as the recent revision in duty drawback rates have only added to their woes.
The slowdown in apparel segment has mainly been on account of subdued demand conditions in the key textile-consuming regions of the United States and the European Union, which account for a majority of exports from India. This apart, cotton yarn exports have been under pressure on account of a decline in demand from China.
India is the worst-affected nation among cotton yarn suppliers to China. India’s share in China’s cotton yarn imports has fallen to eight per cent in the first quarter of fiscal 2018 vis-à-vis 20 per cent and 25 per cent in the first quarter of fiscal 2017 and the first quarter of fiscal 2016 respectively.
Pressures on textile exporters have become more severe with the strengthening of the rupee against currencies of key competing nations during the current calendar year which has reduced the competitiveness of Indian exporters.
