Global lifestyle apparel giant VF Corporation has the option to buy Arvind Ltd's stake in the Indian joint venture within a year as VF Arvind Brands Pvt Ltd completes five years of operations, said sources familiar with the development.

Both VF Corp and Arvind have the option to review the JV structure at the end of five years, but this will be done only in a collaborative manner given the fairly long ties between the two firms.

NYSE-listed VF Corp and Sanjay Lalbhai-led Arvind converted their licensing business into equity joint venture in mid-2006. VF holds 60% stake and Arvind keeps the remaining in the JV that operates brands Lee and Wrangler in the domestic market. "Both partners have the option    of reviewing the partnership by 2011, and VF could offer to buy out Arvind's stake at a determined price," said a source, who did not wish to be identified as details pertaining to the JV are private.

In 2006, VF paid roughly $33 million to Arvind for transferring its licensed operations of Lee and Wrangler to a JV majority owned by the American fashion behemoth based in Greensbro, California.

"VF never comments on speculation of this nature and will not publicly discuss confidential elements of our relationship with key business partners," said VF Corp's Asia spokesperson. "We have been working successfully with Arvind for many years on both product sourcing and retail development and expect that this relationship will continue for the foreseeable future," the spokesperson added. Jayesh Shah, Chief Financial Officer of Arvind Ltd, also echoed similar sentiments in a separately mailed response.

In the course of the JV, which is a little over four years now, VF has charted an independent business strategy unlike in the past when it heavily relied on Arvind. About two years ago, VF pulled out some of the underperforming brands in India - like Nautica, Kipling and Jansport - out of the JV with Arvind.

More recently, VF entered into a licensing deal with Planet Retail to put Nautica back in the market, its first major market association with a local partner other than Arvind in India. But the arrangement with Planet Retail should not be viewed as the emergence of a new ally for VF as Nautica is largely viewed as non-core in the the Indian context. VF has stated that it is willing to look at third party licensing deals for some of its brands that are not the at the core its domestic operations.

One industry source said, VF will bring in its strategically important brands like Vans and The North Face once it sets a new direction for the JV by next year.

VF's leading denim brands Lee and Wrangler enjoyed early mover advantage in the domestic market but has seen competition pick up in recent past. Its arch global rival in denim, Levi Strauss & Co has identified India as its priority market alongside China. Levi Strauss operates a fully-owned subsidiary in the country.

Meanwhile, Arvind, which has licensing arrangements with other international brands such as Arrow, Gant and US Polo, also carries an equal JV with Mohan Murjani for Tommy Hilfigher in India. But Arvind has been chasing India's mainstream apparel market with renewed vigour   even though it continues to believe in straddling all the price segments.

One of the biggest emerging stories for Arvind will its its value retail chain Megamart, which sells mid-market apparel brands including those that competes with Arvind's own. Arvind's portfolio of owned brands has names like Flying Machine, Excalibur, Ruf n' Tuff and Newport.

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