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Brands command more value than companies – Mr Mehta, CMAI
12
Nov '09
In order to gain better functionality on lines attained by SKumars Nationwide Ltd, major apparel retailers are de-linking their retail and manufacturing businesses, which also helps them realize better valuations for the brand as well as tax benefits.

Skumars was amongst the first few to create a separate entity to look after the different aspects of retail business like store management and expansion, retail operations and visual merchandising, etc and one to manage to its core business of manufacturing.

Arvind Ltd too has received a sanction from the Gujarat High Court for de-merging its brands business division into Arvind Lifestyle Brands and its retail business division into Arvind Retail, according to Mr Jayesh Shah, CFO and Director.

According to Mr Rahul Mehta, President, Clothing & Manufacturing Association of India (CMAI), “Most managements would like to increase the value of their companies and it is generally accepted that companies which own brands, command more value than companies, which have mere physical manufacturing facilities”.

He added by saying, “Therefore, companies who may have originally started off as manufacturing companies, but later diversified or expanded in to retail or own their own brands, would have a confused valuation – partly for their brands and partly for their manufacturing assets”.

“In such situations, it is always better for the companies to separate their two entities, so that maximum valuation can be had for their brands and this what most exporters, manufacturers, and retailers are attempting today”, he concluded by saying.

Fibre2fashion News Desk - India

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