Private equity firm Advent International has merged its portfolio companies Dixcy Textiles and Gokaldas Intimatewear to create Modenik Lifestyle which will manufacture intimate-wear and casual clothing for men and women under Dixcy and Enamor brands, the company said on Tuesday.
In 2017, Advent International had acquired a 60% stake in Dixcy Textiles Pvt. Ltd., an innerwear brand in India. In 2019, it acquired a balance 40%. In 2019, the investment firm also acquired women’s inner wear maker Enamor, owned by Gokaldas Intimatewear, from its founders and two private equity firms for an estimated ₹320 crore.
The two companies have now been merged signalling consolidation in the inner wear and casual wear segments, with the latter reporting strong sales in a pandemic year as consumers swapped formal wear for t-shirts and track pants.
Modenik Lifestyle, which will sell five brands, plans to double revenues and EBITDA over the next three years, said Sunil Sethi, executive chairman, Modenik Lifestyle Pvt Ltd.
For the year ended 31 March 2020, Dixcy Textiles reported total income of ₹1,091.6 crore. Gokaldas Intimatewear reported total income of ₹201.48 crore in the same fiscal, according to financial data accessed by business intelligence platform, Tofler.
Close to 80% of the business comes from men and women’s inner wear segment.
“Merging of the two companies into one provides us an opportunity to provide essential clothing to the consumer in both men and women categories, across the price segments – economy, mainstream, semi-premium, premium,” Sethi told Mint over a call.
Modenik will focus on Dixcy Scott Originals, Dixcy Scott Maximus, Josh by Dixcy Scott, Slimz and Enamor. It also has an exclusive licensing agreement with Levi’s to manufacture and distribute in India.
Plans are underway to add more product lines including a wider assortment of athleisure wear such as tracks, leggings, t-shits across Enamor as well as Dixcy Scott. The core Dixcy Scott brand for men is undergoing renovation. A new semi-premium inner wear brand for men–Dixcy Scott Maximus–will be launched over the next few quarters.
Casual wear could contribute to 20% of the new entity’s business going forward.
The new entity will have over 5,000 employees, including 1,600 employees and 3,400 labour staff across its manufacturing operations in Tirupur, Kolkata, Bengaluru, and Ludhiana.
It also announced management changes. Sethi, who was the executive chairman of both the companies, continues in the position. Shekhar Tiwari, previously the CEO of Enamor, takes on the role of chief category and operations officer of the merged company.
Modenik Lifestyle, 100% owned by Advent International, expects to unlock operating synergies through an integrated supply chain, advantages of scale in sourcing, distribution cross-play and the combining of administrative functions.
The inner wear category for both men and women is estimated upwards of Rs15,000 crore. Thermal is another ₹1,300 crore, while casual wear is north of ₹18,000 crore. Modenik Lifestyle will compete with the likes of Page Industries (Jockey), MAS Holdings, Rupa Company, among others.
Sethi said the company will invest in doubling down on direct reach of the brands, spreading to more towns and cities. “Going forward, in the next two and a half years, we are planning to double our direct coverage. Go up from 60,000 stores to about 100,000 stores (directly). We are planning to cover 2,00,000 plus towns directly and then let the balance flow through the wholesale trade,” he said.
As consumption grows, catalysed by a shift in consumer preference to branded apparel, especially in inner wear, the partners expect to benefit from an expanded product portfolio from Modenik that spans price segments and demographics, the company said.
Source: Mint