Merger with Integra to happen in H2CY10: Morarjee Textiles

Morarjee Textiles is a major player in premium cotton shirts and high fashion printed fabrics. It owns a 49% stake in Just Textiles. International clientele of Morarjee include the likes of Hugo Boss, Dunhill, Esprit, Next, Paul Smith and Zara.

In an interview with CNBC-TV18, Harshvardhan A Piramal, Executive Vice Chairman, Morarjee Textiles Limited spoke about the possible merger and the company's business plans.

Here is a verbatim transcript of the interview. Also watch the accompanying video.

Q: The announcement that you have made that your board is deciding to consider and evaluate the merger of your subsidiary that’s Integra Apparels. What is the rationale behind this merger, why would you choose to take this step?

A: The rationale behind the merger is quite simple. Today, Integra Apparels is a subsidiary of Morarjee but there is minimal operational synergy between the two companies.

What we wanted to do was that we wanted to offer the customers a full package of a garment plus fabric rather than offer separate packages of garment and fabric and maybe some time have synergies between the two companies.

Besides that, of course from integrating more, we hope to get some cost benefits through the coordination and operation between the two companies.

Q: Could you tell us when would this merger be complete and what would the financials look like from hereon post the merger?

A: We just took the decision for the merger at the board meeting yesterday. So I would expect that the merger would take another six months to complete after it goes through the due legal process and the due statutory process.

Q: Nonetheless could you give us a ballpark figure considering you would still be declaring standalone numbers. On a consolidated basis what do you hope to close the financial with in terms of your revenues?

A: Our three quarter year, nine months ended December 2009 we had a revenue of about Rs 251 crore, which was only slightly up from last year. We hope to go by on this trajectory itself for this year and end at about revenue of Rs 330 crore odd on a consolidated basis.

However the important thing here is that in the next year after we complete the merger of the company we hope to see much more synergy, many more benefits, cost benefits as well as keeping the downstream value within the company. And therefore for the next year although I wont be able to give you specific numbers – we will turn profitable.

Q: By next year the merger will be complete by Q1?

A: The merger will take about six months to complete. So we hope by half-year the merger should be done.

Q: We noticed that your international clientele includes the likes of Zara and Esprit. You have any indication when Zara would come to India?

A: They haven’t shared this information with us. Although they keep telling us they are interested in the Indian market and in fact they do say that they have imminent plans. But honestly I do not know anything much beyond that.