Keen to shed its ?textile? tag, Arvind Ltd has been betting big on its value retail and lifestyle brands units, eyeing Rs 1,000 crore revenues in the next two years and planning to expand its retail business internationally. One year after Arvind Ltd was formally demerged into Arvind Lifestyle Brands and Arvind Retail, J Suresh, chief executive officer of the two divisions, tells FE?s Shreya Roy how the decision brought the formerly loss-making entity out of the woods. Excerpts:

How has the demerger of the two divisions worked out for Arvind Mills?

Five years back, Arvind Ltd was a Rs 200-crore company, running at an operational loss of Rs 17 crore. We then put together a strategy to bring in stronger focus on the business and we divided it into value retailing through MegaMart for the large middle class and lifestyle brands through a portfolio of aspirational labels such as Arrow, Gant and Izod to cater to upper middle class and above consumers. With this model, we managed to reach a total business of Rs 440-crore and we were at the point of breaking even with our operating profits about a year ago. Owing to this success, the parent company decided to demerge the two divisions officially.

We are now at Rs 550 crore, with operating profit of over Rs 30 crore. Our contribution to the revenue of the parent company has also gone up from 12% a few years ago to 22%.

Last year, Arvind Mills? chairman and managing director had said that the company would be looking at bringing in strategic investors to achieve its growth targets. How has that been going?

We have been growing aggressively but thus far we have managed with internal accruals. We may look at strategic investors, but we have not yet decided when to bring them in.

You have extended your licensing agreement with the licensor and global brand management company Cherokee Inc for distributing their products in the Middle East. How will this help your retail business?

We now have an agreement to distribute Cherokee through out UAE, Qatar, Bahrain, Oman, Yemen, Kuwait, Saudi Arabia and Egypt which will help us expand our international business. We are looking at about Rs 30-40 crore in the second year of operations. We are in talks with a few hypermarkets and hopefully we will be able to enter the market by December this year.

What are your growth plans for MegaMart?

We are growing MegaMart very rapidly, opening three stores a month. This year, we plan to open 35 to 40 small format stores, taking the total to 180-185 stores. We will be expanding on our existing market in south India in addition to strengthening our presence in Maharashtra and Kolkata. We will be looking at expansion in north India as well, particularly in Punjab, but that may not be this year.

There has been a mushrooming of value retail chains all across the country, with a value store present on every street of a metro. Are you anticipating this market to get crowded rapidly?

This is a very large market, with enormous opportunity. I believe it will take at least ten years to mature, at the end of which you will probably have about three to four large players.

Do you have any plans to enter lifestyle and premium retailing stores?

Our premium retailing consists mainly of our premium brand outlets, like Arrow stores, which we are planning to expand from 75 to 100 this year. We are planning to open 10 US Polo outlets, and we will also open Izod stores. In the super premium category, we have our Gant stores.

However, we don?t have any multi-brand retail outlets. We may consider it in the future if we find appropriate space which needs multiple brands.

What are your plans for own product portfolio? Are you thinking of introducing any new brands of your own ?

People prefer international labels, since they are more aspirational. So we are always on the lookout for international brands to bring in to the Indian market.

We are in talks with Energie, a super premium Italian brand. We also will continue to look for more brands to add to the range in MegaMart. But we have no plans to launch any brands of our own currently.

You had announced a plan to reach Rs 1,000 crore by 2012. What is the current status of that plan?

Our goal was to take MegaMart to Rs 600 crore and the brands business to Rs 400 crore by end of fiscal year 2011-2012, which we are well on track to achieve, with our revenue as on March 31, 2010 at Rs 550 crore.