SP Apparels mulls listing its retail arm at an appropriate time

SP Apparels Ltda leading manufacturer and exporter of infants & children’s garments, is looking to list its recently carved out retail arm at the right time.

More brands

The ₹867 crore company has hived off its retail division into a separate company, SP Retail Ventures Ltd. Two more brands have been added – a children’s brand ‘Angel & Rocket’ and a premium brand under SP Retail Ventures under the retail business.

“We have also added one more brand, an international brand that is well known for skiing. It has given license to SP Retail Ventures to manufacture and sell apparel and footwear in India under the brand “Head”. This brand comes under the athleisure segment,” P Sundararajan, Chairman & Managing Director, SP Apparels Ltd said.

“We are confident that with brands like Crocodile, Head, Angel & Rocket, and Natalia, the retail company will do very well, and we’ll be able to get this company listed at an appropriate time separately,” he added.

In the June 2022 quarter, SP Retail Ventures clocked revenue of ₹17.1 crore and a positive EBITDA of ₹50 lakh. But, reported a loss of ₹40 lakh.

While the Avinashi-based company has set up 59 stores under all brands, it has opened two new stores for Angel & Rocket in Bengaluru and opened stores for the Head brand. Both are reported to be doing well.

Diversion of orders

Sundararajan said there is a slowdown all over Europe and the UK due to the Russia-Ukraine war. However, the business with regards to babies and kids is not affected much. “But there is a kind of competition with Sri Lanka and Bangladesh because everyone needs orders. So, that is the challenge we are facing. But we are able to manage so far by being competitive to some extent amid some hit on our margins,” he added.

He also pointed out that there were diversions of some orders from Bangladesh to India due to certain prevailing issues there.

Last year, the customers were talking about diverting their business from China. Suddenly this time, they want to divert some of the business from Bangladesh for two reasons. One is the sharp increase in orders to Bangladesh, which is too risky for them. Secondly, the raw material costs, the power problems, and uncertainties in deliveries. “These are big concerns for the buyers. So, they want to play with the safer country and they prefer India. We are even getting some regular orders that are supposed to be produced in Bangladesh,” said Sundararajan.

SP Apparels’ garment export division, which accounts for 88 per cent of the revenues now, had an order book of about ₹400 crore as of June 2022 quarter and the company is in the process of adding two more customers in this quarter.

Published on

August 21, 2022

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