The Rs 940 crore firm said the majority control of the two subsidiaries would remain with it. At a later date, the company plans to list the two businesses through an initial public offer (IPO).

The spin-off will result in a sharper focus on the two businesses and ability to raise required capital due to segregation from Arvind's predominantly cotton textile business, the company said in a release.

The release said the infusion of cash in Arvind by divestment of a part of equity in the two proposed subsidiaries will help mitigate the liquidity crunch it is facing on account of a downturn in its key denim business and startup pressures of its newly-commissioned Santej complex.

Arvind's garments division markets Arrow, Lee,Newport, Flying Machine/Ruggers, Excalibur and Ruf & Tuf and the telecom division manufactures and markets Syntel brand of small epabx machines and provides public mobile radio trunking services in certain service areas under the brand name Omnitalk.

Arvind's chief financial officer, Jayesh Shah said ``Arvind shareholders can benefit in two ways. Arvind will get much-needed non-debt cash and this will enable the management to refocus and decommoditise its textiles business.''

Decommoditisation of cotton textile business would be pursued through product differentiation.