‘Only Vimal’ and Reliance may no longer be together

Reliance Industries (RIL), India’s largest private sector

company, has decided to sell its textiles business, including its iconic brand ‘Only Vimal’. The Mukesh Ambani-led company has hired N M Rothschild to manage the sale of the business. The textiles business, including a factory at Naroda near Ahmedabad, is expected to be sold by the year-end. This plant was set up in 1966 by late Dhirubhai Ambani and his brother Ramniklal Ambani, and was the first manufacturing asset. The unit contributes less than Rs 2,000 crores to the group’s annual turnover of Rs 85,000 crores. Textile business contributes just over two per cent of RIL’s total revenues and the return on investments has not kept pace with RIL’s strategy of minimum 20 per cent return. Company sources have confirmed that the group was exploring all strategic options, including a sale of the textile operations.

It may be noted that 'Only Vimal' is essentially a vertical branded fabric maker, which competes with Tier-II rivals like OCM and Siyaram’s. OCM is controlled by American investor Wilbur Ross, known for restructuring failed companies and could be a potential suitor, said industry sources. RIL’s decision to sell the brand comes on the heels of textile major Arvind, who is currently facing labour woes at its Naroda plant and the strike is worsening as more labourers from other division joining the agitation. Even Reliance has experienced such frequent labour trouble at their Naroda factory. In April this year, employees at the factory went on a strike seeking a 60 per cent rise in wages.

The Vimal brand ,which began with saris in the 70s, graduated to men’s suiting in the 80s and home furnishings under the Harmony brand name and went for a major revamp in 2007. The brand became popular as Only Vimal after some retailers started selling only Vimal fabrics because of the fat margins and credits Dhirubhai offered them. But Vimal, lost its charm with no investments made to develop its branding with the changing times. And Mukesh Ambani retained it because of the emotional attachment.