MUMBAI (Reuters) - Textiles firm Arvind Mills Ltd said on Friday it would raise 2.63 billion rupees from the founders through a warrants issue to fund its retail and brands’ expansion, sending its shares up.
The founders would subscribe to 50.6 million warrants, convertible into equity within 18 months at 52 rupees a share. The founders stake would rise to 46.77 percent from 33.9 percent on conversion, the company said in a statement.
Shares in the company touched a high of 63.65 rupees on the news, before ending 6.4 percent up at 61.90 rupees in a firm Mumbai market.
“The company is trying to manage the challenge in its core fabrics and garments business against the backdrop of rising rupee,” Managing Director Sanjay Lalbhai said.
“There is requirement of funds for the growth of the business as well as a need to augment the net worth.”
India’s largest denim maker Arvind Mills, which sells brands such as Arrow, Excalibur and Tommy Hilfiger, is in the midst of relaunching several brands. It is also growing its retail network to cash in on a retail boom sweeping across the country.
Lalbhai earlier this month said Arvind Mills would focus on the fast growing domestic market to counter the effects of a rising rupee against the dollar. The company hopes to get about two-third of its revenue from India in 2007/08, up from half now.
Indian retail, valued at nearly $350 billion, is forecast to double by 2015, with modern retail’s share of that rising faster from 3 percent now.
The Indian rupee has risen more than 11 percent against the dollar, the highest among emerging market currencies, chewing into margins of exporters as firms get fewer rupees than earlier for each dollar worth of goods exported.