labels: advertising/branding
Signs change for Zodiac Clothing news
18 February 2002
Mumbai: The Mumbai-based Rs 110-crore Zodiac Clothing, manufacturer of shirts, ties and trousers for men, is making an attempt to increase its presence in the retail industry here.

To begin with, the company has increased its stake in the lifestyle chain, Shopper's Stop, from 0.95 per cent last year to 2.11 per cent this year through the private placement route, making it the second-largest stakeholder in the company after the promoters, the Rahejas. The House of Zodiac, which picked up 2.5 lakh shares last year, has increased it to 5.55 lakh shares this year in the unlisted company of Shopper's Stop.

The CL Raheja-promoted Shoppers' Stop presently has about 80 per cent of its equity held by its promoters, followed by Zodiac and other institutional promoters like ICICI, IL&FS and JM Morgan Stanley. Last year Zodiac Clothing picked up a stake in Shopper's Stop by buying out certain institutional shares.

Zodiac Clothing Company managing director A Y Noorani says he strongly believes in the future of retailing in this country. ''I consider such investments as a stream of income for the company, and Zodiac is looking at strategic alliances with more such retail chains.''

The bulk of Zodiac's revenue comes from exports to Europe where its products are sold under different labels including the brand of Zodiac. In recent years, with the European market drifting into recession, Zodiac has increased its focus on the domestic market. In the year 1999-2000 exports accounted for 90 per cent of the income from sales - at Rs 58 crore. In India, Zodiac has over 80 exclusive retail outlets and is slowly planning to increase its presence further.

For Shopper's Stop this investment will be welcome considering the fact that the Rs 250-crore retailer has been reeling under losses, which were estimated at Rs 14 crore last year. Further, the investment by a garments manufacturer with a strong brand is certainly significant.

Shopper's Stop, which is planning to float an IPO within the next two years, has, in the meantime, introduced its own private labels and is expected to make profits this year. Analysts tracking the textile industry say that Zodiac faces intense competition from brands like Color Plus, Provogue, Allen Solly, Louise Philippe and Peter England and the tying up with a retail chain like Shopper's Stop is its way of ensuring shelf space in the future in the retail chain.

A critical factor in the success of Zodiac is its extensive distribution network as it was among the first companies to launch branded clothes in the country. It now ranks among the top five brands selling in the domestic ties market.

Zodiac has also forged alliances with retail chains like de Bijenkorf in Holland and Ciro Citerrio in the UK, though these are more in the nature of exclusive arrangements to stock the Zodiac brand at those stores. Noorani says he is looking at the possibility of picking up a stake with these international chains as well.

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