Flipkart to buy stake in Arvind unit behind Flying Machine brand
Photo Credit: Reuters

Walmart Inc.-owned online retailer Flipkart has agreed to acquire a minority stake in a subsidiary of Arvind Fashions Ltd that owns the Flying Machine brand of denim apparel.

Flipkart will pay Rs 260 crore ($34.66 million) for a “significant minority stake” in Arvind Youth Brands Pvt. Ltd, Arvind Fashions said in a statement. It didn’t specify the exact quantum of the stake it is selling.

The deal extends the partnership between the e-commerce firm and Arvind Fashions as Flying Machine products have been retailing on both Flipkart and its fashion e-tailing arm Myntra for more than six years.

Flying Machine is one of the top denim brands in India and has built a strong presence especially among the youth. Flipkart and Arvind said they will jointly work to develop more products under the 40-year-old brand.

“Through this investment, we look forward to partnering with the team at Arvind Youth Brands to continue to grow the market for its portfolio of products and enhance the strong brand equity that has been built over the last few decades,” said Kalyan Krishnamurthy, CEO for Flipkart Group.

J. Suresh, managing director and CEO at Arvind Fashions, said that Flipkart’s investment will help it accelerate its online growth strategy as it focuses its efforts on developing an omni-channel retail approach for Flying Machine.

In another regulatory filing, Arvind Fashions said the company and its unit Arvind Lifestyle Brands Ltd are selling the wholesale and retail trading businesses under the Flying Machine brand, respectively, to Arvind Youth Brands.

Arvind Fashions is transferring the wholesale trading business for Rs 61.9 crore while Arvind Lifestyle is doing so for Rs 151.3 crore, subject to working capital adjustment.

Earlier this month, Arvind Fashions had pushed back plans to raise capital via a rights issue due to the countrywide lockdown to combat the spread of coronavirus and overall market conditions.

The company had approved raising Rs 300 crore in equity capital on March 12.

Arvind Fashions had raised private equity funding from Renuka Ramnath-led Multiples in 2016. The following year, Arvind Ltd decided to demerge its branded apparel business under Arvind Fashions and the engineering business under Anup Engineering and list the two entities separately on the stock exchanges.

Besides Flying Machine, Arvind Fashions has several licensed product brands such as Calvin Klein, Tommy Hilfiger, US Polo Assn, Ed Hardy, Hanes, Arrow, Gant and Nautica.

Flipkart, which was acquired by Walmart in 2018 for a record $16 billion, has been investing in companies in the past.

Besides Myntra, which is one of its prized units, it acquired mobile payments company PhonePe.

Last year in November, the e-commerce giant invested in EasyRewardz Software Services Pvt. Ltd, a company that offers services related to loyalty-based rewards, as part of the startup’s Series B funding round.

The following month, Flipkart bought a minority stake in logistics startup Shadowfax.

In the same month, Walmart and Flipkart jointly invested in Ninjacart, a business-to-business marketplace for agricultural produce.

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