Aditya Birla Nuvo is restructuring its retail garment business as it looks at saving at least Rs 100 crore through a slew of cost-cutting measures, reports Pradeep Pandey in Mumbai.
“We are taking several initiatives like closure of the unviable stores, re-negotiation of rent, reduction of area of some outlets from planned 12,000-15,000 sq ft to 2,000 sq ft and rationalisation of manpower,” said Pranab Barua, who will join the company as business director from May 1.
Mr Barua will also be a whole-time director. The diversified conglomerate plans to close 30 non-profit making stores. The restructuring also includes remodelling of stores that are run by Madura Garments. However, he was quick to add that the company’s long-term expansion plan of setting up another 150 stores in three years remained intact.
The proposed restructuring follows bad financial show of the garment business in the last financial year. During FY09, the garment segment has suffered net loss of Rs 128.7 crore compared with Rs 25.5 crore in the previous year, on account of high investment in infrastructure and brand building. Its exports business incurred forex loss of Rs 20 crore on cancellation of few orders and lower capacity utilisation.
The higher rentals on expanded retail space also impacted the company’s bottomline
Source: Economic Times