SP Apparels, the Avinashi-based garment company, plans to raise private equity of ₹100 crore to fund its retail business. It has also given termination notice to ‘HEAD’, an Austrian brand, and will exit the brand from December 2024.

“The funding is primarily for our own premium kids’ wear brand Angel & Rocket, based in the UK. The plan is to raise money to expand the brand in India and GCC,” said the company’s Joint Managing Director, S Chenduran. “We are confident that SP Retail ventures will be able to raise capital during the current financial year to support their aspiration of growth and cash flows,” he told businessline.

The company is exiting the licensing arrangement by the end of this calendar year with HEAD brand after five years. This business contributed to ₹4 crore revenue annually, but the losses were quite high because of the minimum guarantee royalty. The impact, going forward, will be significantly positive for the retail subsidiary SP Retail Ventures, he said.

“The Austria-headquartered HEAD is a leading tennis and ski brand as well as other sports equipment and we signed a licensing agreement for sportswear and footwear in 2020 (just before Covid pandemic). They are headquartered in Austria,” he said.

SP Apparels manufactures and exports knitted garments, and also mens’ wear garments in India under the Crocodile brand.

The company’s 2023-24 annual report says that the year was a tough year for the retail sector. Inflation and higher interest cost has created some stress in the retail industry.

Net profit

For fiscal ending March 31, 2024, the company reported revenue of ₹964 crore as against ₹962 crore in the previous year. Net profit was ₹104 crore (₹92 crore).

The company’s 2023-24 annual report said that Indian apparel retail sector is poised for significant growth by 2027, with its value projected to increase to $89,219 million by 48.7 per cent from 2022. This growth is anticipated to occur at a compound annual growth rate of 8.3per cent from 2022 to 2027.

A key factor driving this expansion is the escalating presence of international brands and retailers, which are entering the Indian market through various collaborations. International apparel giants like Hugo Boss, Diesel and Kanz have already started their operations in India. This trend along with India’s strong exports of garments and textiles, fuelled by a surge in disposable incomes and growing consumer demand for sustainable and ethical fashion, is laying the groundwork for a thriving apparel industry in India.

Additionally, India’s apparel market benefits from a comparative advantage in terms of skilled manpower and lower production costs compared with other major textile producing countries, making India an attractive hub for both production and retail in the apparel industry, the report said.

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