Lalit Agarwal, Chairman & Managing Director, V-Mart Retail
Value fashion retailer V-Mart is honing in its strategy for south India as it steps into uncharted territory, with the acquisition of Unlimited from Arvind Lifestyle Brands. The company will acquire 74 retailer stores of Unlimited as well as its warehouses and inventory across south and west India.
As it completes the acquisition, the company plans to rebrand these stores to V-Mart and also bring down the average selling price (ASP), which currently stands at Rs 500, a tad higher than that of V-Mart.
“We intend to keep running our business under a single brand, and, hence, we will rebrand Unlimited to V-Mart, going ahead,” said Lalit Agarwal, Chairman and Managing Director, V-Mart Retail.
Entry into southern market
With the acquisition of Unlimited, Agarwal said the company gets access to new states, where apparel consumption is large. The company plans to tap Unlimited’s insight into this market to customise its strategy.
“We plan to keep 60-70 percent of inventory here the same as in the other markets, but about 30 percent of it will be customised to suit the unique needs of the region,” said Agarwal.
With the deal, V-Mart Retail is set to become a pan-India player in the retail segment, with revenues of over Rs 2,000 crore. V-Mart Retail had clocked a revenue of Rs 1,662 crore in FY20, while Unlimited had reported Rs 533 crore in revenue during the year.
The value retailer plans to close the deal by September, ahead of the festive season.
Agarwal stressed that there are several synergies between the two brands as both operate in value retail and Unlimited store’s size is similar to V-Mart’s.
Currently, V-Mart has 282 stores, mostly in northern and eastern India, over 75 percent of which are in Tier II cities and beyond. Unlimited, too, has a large presence in smaller towns, and 41 out of its 71 stores are in Tier II cities and beyond, according to an investor presentation by V-Mart Retail.
“V-Mart currently invests Rs 2 crore (Rs 1 crore in capex and Rs 1 crore in inventory) in any new store. This acquisition allows the company to acquire 74 existing stores in new territory at a very similar cost,” the company said in its presentation.
As per the deal, Arvind Lifestyle Brands will receive a cash consideration estimated at about Rs 150 crore, upon closure of the transaction.
“In addition, there are contingent payments to be received, based on certain milestones achieved by V-Mart over the next few years for these stores, post the acquisition,” Arvind Lifestyle Brands said in a press release.