Raymond in JV pact with European denim major UCO NV
By Our Corporate Bureau | 08 Aug 2006
Textile and apparel major Raymond Ltd and European denim major UCO NV, will launch a 50:50 joint venture company. To be incorporated in India as Raymond UCO Denim Pvt Ltd and with executive headquarters in Belgium, the company will be engaged in manufacturing and marketing of denim fabrics.
UCO NV produces and sells diversified collections of denim for leisure wear, focusing on innovative high value added fabrics and has a 70-per cent market for colour denims within Europe and Raymond UCO Denim will supply premium denim fabric in the global market.
With this tie-up between the two majors, the new JV company would emerge a single entity having manufacturing facilities spread across three continents — the US, Europe and Asia with a combined fabric capacity of 80-million metres per annum and a vast global marketing network.
As per the agreement, Raymond has transferred its denim business to the joint venture company, while UCO NV has transferred its stake in its denim subsidiary located in Belgium, (which holds the denim companies of UCO NV) to the new joint venture.
A board of directors, which will have equal representation of both the partners, will manage the JV.
Announcing the formation of the JV, Gautam Singhania, chairman and managing director, Raymond Ltd, said, "We are extremely pleased to be part of this new company that will be a major force in the world of denim. This joint venture brings together the experience and expertise of two major denim-manufacturing companies in the world. UCO NV is a world-class company and the most ideal partner to take our denim business to greater heights. At Raymond we continue to move forward towards taking our business global."
Together, Raymond UCO Denim will build on their synergies for meeting the global sourcing requirements of large international brands in their markets. The flexibility in manufacturing will match customer demand for design, style and finishing that are required for the fast changing fashion world.
The JV will also increase the width of the merchandise substantially and cater to the requirements of individual markets and assist in the diversification of the customer base for both partners. It will also benefit greatly from international standards in product design, development and manufacturing practices through the European and US facilities.
The global demand for denim today is estimated at around 5.5-billion metres. The size of the global denim fabrics industry in 2005 was valued at an estimated $10 billion. A combination of technology advancements, product shifts and the growing demand for denim products indicates healthy medium term growth for the denim and denim jeans industry in the future.
This increase in growth is driven by population growth; spending power and the fact that, jeans has been a staple wear for the world consumer. Asia, America and Europe account for 97 per cent of the total world market, which are primary markets for this new joint venture.
The market for jeans in India is estimated at 90-million pairs per annum. Out of this, 30 per cent is made of branded jeans. The changing demographic landscape of Indian population is also fuelling the growth in demand for denims. As the demand for end product increases, the underlying demand for high quality denim fabric will also increase. With international product design, development and manufacturing practices, Raymond UCO Denim Pvt Ltd. will be able to cater to the increasing demand for value added denim products.
