Canbank Venture Capital Fund Limited (CVCFL), a subsidiary of Canara Bank, has picked up 6.11 per cent stake in Bangalore-based Scotts Garments Limited for Rs 20 crore. The CVCFL has made the investment through its Emerging India Growth Fund, a Rs 500 crore fund.
Scotts Garments, promoted by Naseer Ahmed in 2002, is a 100 per cent exp-ort oriented unit with rea-dymade garment manufacturing facilities at Bangalore and processing unit at Tirupur in Tamil Nadu. The company has been exporting garments to several global brands including Jack & Jones, Veromoda, Only, Marks & Spencer, American Eagle, H&M Hennes & Mauritz, Perry Ellis, Benetton, Walmart and Carrefour among others.
The company, which is coming out with an initial public offer (IPO) to raise Rs 155 crore in January 2013, plans to part finance the setting up of new units for trouser manufacturing at Doddaballapur in Karnataka, knitting and fabric processing unit at Kagal in Kolhapur district of Maharashtra.
“We are already operating 21 manufacturing units in Karnataka and Tamil Nadu. We are investing Rs 300 crore to expand our manufacturing capacities in Karnataka and Maharashtra. We will use pre-IPO and IPO proceeds apart from term loans from Canara Bank to fund our expansion,” Naseer Ahmed, managing director, Scotts Garments Limited said.
He said the company would manufacture 25,000 pieces of denim garments per day at its new factory in Doddaballapur’s apparel park near Bangalore. The company has acquired 15 acres at the park from the government. The unit will be operational in April 2013. Another unit planned in Kagal will have a processing capacity of 40 tonnes per day.
“We expect a huge market to open up for domestic garment companies once India signs the Free Trade Agreement with European Union. We want to be ready with new capacities to exploit the opportunities coming up,” Ahmed said.
The company, which reported a topline of Rs 500 crore in 2011-12, is looking at a growth of 10 per cent for the year-ending March 2013.