Reid & Taylor is a division of the UK-based global textile giant Allied Textile Engineering.

Confirming the development, a S Kumars director said the company is buying a stake in Reid & Taylor to strengthen its presence in the worsted fabrics segment, which it currently imports. However, he refused to disclose the pricing and the equity structure of the deal. The group values the Reid & Taylor brand equity highly, and may have avoided full acquisition to keep the foreign presence going, the source added.

The move coincides with the company's entry into the worsted fabrics segment in a major way. The company's worsted fabrics plant at Mysore with a capacity to produce fivemillion metres per annum has already gone on stream with products slated to hit the market in November.

The worsted fabrics will be branded separately without the name of S Kumars attached to it and will be targeted at the upper middle class, sources said. The company may sell the product under the Reid & Tailor brand name with a view to capitalise on the popularity of the latter. Incidentally, the company has been importing worsted fabrics from Reid & Taylor since 1995 for the top segment with a suit length costing Rs 10,000 and more. But the new products will be priced much lower in consonance with the purchasing power of the upper middle class, sources added.

The company is believed to be aiming at a sales target of Rs 200 crore per annum of which Rs 50 crore will be for overseas markets like Japan, USA, Canada, Europe and the Middle East, sources said.

Analysts said the company will have to face stiff competition in the worsted fabrics segment as it has been dominated by players like Raymonds.Raymonds has a 35 per cent share of the worsted fabrics market and S Kumars will have to resort to proper pricing in order to take on others, they added.

Though the company is making a strategic investment in an overseas firm for the first time, it did go on an acquisition spree last year in the domestic market, taking over Hindon River Mills, an integrated textile complex near Delhi and a spinning and weaving unit of Standard Mills at Dewas.

The company, sources said, is in the process of beefing up its retail distribution network and plans to have 300-400 retail outlets in four years, most of which will be owned by franchisees.