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July 6, 2005 The Economic Times

Kotak takes equity in Sabare for Rs 30 cr

Co Is A Rs 150-crore Home Textile Products Exporter Catering Mainly To The US Market

Kotak Private Equity has picked up a significant equity stake in Sabare International, a leading home textile products manufacturer and exporter, with an investment of Rs 30 crore.

Promoted by a first generation entrepreneur, Mr. S Susindran, in 1991, Sabare has manufacturing facilities in Karur (Tamil Nadu), Noida, Panipat in India and overseas facilities in Shanghai, China and Atlanta, USA.

The Rs 150-crore company largely exports to the USA and caters to major retail chains like Wal-Mart, Target and JC Penney. It is present in product segments like table & kitchen, window curtains, floor coverings and bedding.

“Global retailers are increasing their sourcing of home furnishing products from India. We believe, Sabare, with its global manufacturing and distribution model, is uniquely positioned to leverage this,” said Mr Nitin Deshmukh, head, Kotak Private Equity Fund..

“The equity participation from Kotak is to part-fund our Rs 100-crore expansion plan,” said Mr Susindran. However, he refused to divulge the exact holding of Kotak following this deal, which was structured by Veda Corporate Advisors, an investment banking firm.

The balance funds required for the expansion has been tied up through a term loan from Canara Bank and internal accruals. As part of the proposed expansion, the company intends to increase its capacity across all facilities and to strengthen its marketing presence in the US.

“Our pioneering efforts at creating our own distribution and supply chain infrastructure in the US markets has become a key differentiator for us. We have a large warehouse (3.5 lakh sq ft) in Atlanta and our products are delivered at the doorsteps of our customers. We are planning to set up one more warehouse in Phoenix,” said Mr Susindran.

Sabare’s game plan is to achieve a turnover of Rs 250 crore for 2005-06 and sell up to over Rs 500-crore size by the year 2009. “By setting up a facility in China, we have remained competitive even in the price-sensitive product segments. Further, with the manufacturing facility in the US, we have achieved the true global manufacturing model and became a one-stop shop for our customers,” he said.

The global home textiles industry is a $50-billion market, which promises to offer vast potential for Indian and Chinese manufacturers as a result of abolishment of the quota system with effect from January 1, 2005. The winding up of several leading US-based home textile majors is also expected to accelerate the growth of Indian and Chinese players.

Having established itself in the US market, Sabare is currently looking at Europe as the next biggest market. It is exploring opportunities with large retail chains.