Exclusive: GIC may swap stake in Reid & Taylor with debt-laden listed parent S Kumars
Singapore sovereign wealth fund GIC may get to swap stake in Reid & Taylor with the listed parent S Kumars Nationwide (SKNL), a company executive told VCCircle. Although this could provide a future liquidity window for GIC, given the state of affairs of debt-laden SKNL, it may not be much of a bailout for its seven-year-old investment.
In its meeting last month, Foreign Investment Promotion Board (FIPB), the nodal body monitoring foreign investment in the country, had rejected a proposal by SKNL to swap GIC's interest in premium worsted suiting brand Reid & Taylor, with the firm.
When contacted by VCCircle, SKNL promoter Nitin Kasliwal declined to comment while Jagdeesh Shetty, CFO and member of the audit committee at SKNL, claimed: “The share swap has not been rejected. There are certain processes to be followed.” He did not share further details on the proposed move.
A separate email sent to GIC spokesperson to seek comments went unanswered.
A British brand, Reid & Taylor was launched by SKNL in India in 1998 with a fabric plant at Mysore. It offered both fabrics and apparel under one label. The apparel range included formal and casual daywear suits, jackets, trousers, shirts ties and accessories along with a selection of T-shirts, jeans and other weekend wear. The apparel range was made at a dedicated facility in Bangalore. The firm had also roped in Bollywood veteran Amitabh Bachchan as a brand ambassador.
In 2008, GIC invested Rs 900 crore in Reid & Taylor (India) Ltd and held 25 per cent stake, valuing it more than its parent. SKNL had hived off Reid & Taylor into a separate entity to enable this investment and unlock the valuation embedded with the brand.
SKNL continues to hold the rest of the stake in the firm.
There have been attempts in the past to create a window for monetisation from Reid & Taylor. In 2010, the firm had filed DRHP to raise approximately Rs 500 crore via an Initial Public Offer and GIC had plans to part exit in the issue. However, this never materialised.
Again in 2013, SKNL was planning to sell its majority stake in the company to buyout funds and strategic investors. SKNL needed to offload stake to repay its debt piled-up especially because of acquisition of US-based HMX Acquisition Corp which later filed for bankruptcy.
Kasliwals-controlled SKNL, once one of the top textile and garment firms in the country, is now 96.4 per cent owned by public shareholders, as of March 31, 2015. The firm's shares are suspended for trading on the bourses due to compliance issues and it has not filed its last three quarterly financial results and audited results of the last two financial years.
Recently, the shareholders of SKNL sought to remove CMD Nitin Kasliwal and the top executives for mismanagement.
A proxy advisory firm Institutional Investor Advisory Services stated that “S Kumars is a leaderless company. The lenders have withdrawn their board nominees and institutional shareholders have exited the stock, leaving retail shareholders to hold the baby.”
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Reid and Taylor India Ltd. manufactures and markets premium range of worsted and poly viscose suiting fabrics, and apparel in India. It manufactures and sells formal and casual wear. The company products include suits, jackets, blazers, trousers, formal clothing, casual and sportswear that includes casual shirts, T-shirts, and chinos; and accessories, such as ties, leather belts, jeans, cufflinks, and formal socks. It sells its products under the brand name Reid and Taylor. The firm was founded in 1998 and is based Mysore, Karnataka. The company operates as a subsidiary of S. Kumars Nationwide Ltd.
S. Kumars Nationwide Ltd. (formerly S. Kumars Synfabs Ltd.) is engaged in manufacturing, distributing and exporting textile, apparel, fabrics and ready to wear garments. It offers consumer textiles including school uniforms, industrial workwear fabrics, military uniform fabrics, hospitality uniform fabrics, medical and paramedical work and worsted and premium suitings including polywool blends, wool cashmere blends, wool Linen and wool silk polyester blends, polyester viscose blends, fine cotton fabrics, t–shirts, jackets, socks, cufflinks, belts, suits, blazers, shirts, trousers and ties. The company was founded in 1990 and is based in Mumbai, Maharashtra.