The popular apparel discount chain ‘Megamart’ owned by the Arvind Mills may soon acquire a new separate identity as it’s likely to spin off from the parent company with help from an outside investor. This plan is said to be a part of the significant rebuilding of the Arvind’s brands and retail business that estimated to touch a turnover of Rs 450 crore this year.   

 

It is learnt that Arvind Mills could either seek hauling up its brands and retail operations into two separate units or into a single separate body embodying both businesses. However, the probability of establishing a retail company under the discount fashion store chain, Megamart seems more credible. Industry insiders reveal that investigatory talks with private equity investors is on though the spin-off plans may gain impetus only next year.

 

Even though Megamart is being seen as the vital retail growth driver in the coming four years – the parent company, Arvind Mills, is aiming to derive income of about Rs 2,000 crore from the value chain format by the conclusion of financial year 2011. It is being stated that Arvind Mills may eye premium formats to enhance its retail operation. Officials from the company have, however, refrained from divulging further details about the project for the time being. 

 

The present revenues of Megamart could be in the Rs 130 - 150 crore bracket. So the spin off may come at a time when the company’s income has escalated to around Rs 250 - 275 crore in the following 12-18 months. However, Arvind Mills is concentrating on growing Megamart into an Rs 2,000 crore body by the year 2011. For this, it will need about 2 million sq ft of retail space in India. At the moment, it has 2.5 lakh sq ft retail space in its name.  

 

In the fourth quarter of the current fiscal, Arvind Mills is projected to open huge format Megamart stores in Chennai, Pune and Hyderabad. The space in these stores may be between 50,000 sq ft and 1,00,000 sq ft in size, housing about 80 to 100 brands. Megamart, which until now only sold Arvind’s own or related brands, will henceforth invite products of other competing companies too. It’s being viewed as a move against Pantaloon’s Brand Factory in the value fashion sector.