Tirupur-based PGC Textiles Ltd is buying out the 14 per cent stake it does not own in the Swiss apparel firm Switcher, according to a senior company executive. Switcher also happens to be the country’s largest lingerie manufacturer. The Switcher Group has more than 1,150 corporate clients in Switzerland and Europe, and owns 360 stores, corners and centres in Switzerland.
Started in 1987, PGC has been manufacturing for Switcher for the last 20 years. However, over the past two years, it had acquired controlling stake in Switcher from a financial investor and the promoters to increase its holding to 86 per cent.
Prem Duraiswamy, managing director of PGC, said that the remaining 14 per cent stake would be acquired in the next two months. “Since it is a structured deal, staggered over a period of three years, the total consideration for the company is $30 million,” he added.
PGC has introduced Switcher in the US market last year and is planning to launch the Switcher brand of innerwear in India in the this few months.
“The idea is to expand distribution in geographies other than Switzerland,” said Praveen Chakravarty, chief executive officer and head of institutional equities with Anand Rathi Financial Services. is the advisor to PGC for the deal.
“The deal will be funded by a combination of internal accruals and debt,” Chakravarty added.
PGC has its inorganic growth strategy in place where it is looking at acquiring another textile distributor in the USA for $50 million. “We have signed a non-disclosure agreement with the company and hence, I cannot reveal further plans. But we are looking at closing the transaction by the end of the first quarter of the next financial year,” said Duraiswamy.
PGC has more than 3,000 point of sales and control over the entire supply chain – starting from raw cotton to its retail sale stage. It has also launched its own brands a few years ago, which are now retailed in India, Belgium and America.
As per the company website, the retail wing of PGC contributes around 50 per cent to the group’s turnover.
According to Duraiswamy, the company has been growing at 40 per cent annually in terms of turnover and profit after tax. For the period ended March 31, 2011, the company saw a turnover of Rs 870 crore and a profit of around Rs 80 crore.