Exclusive | Arvind Ltd in talks to buy US fabric maker Dalco for $125-140 million to expand overseas

Arvind Limited's technical fabrics arm, Arvind Advanced Materials, is in active discussions to acquire a majority stake in Dalco Nonwovens, a US-based needlepunch nonwovens manufacturer, sources told CNBC-TV18. The deal is estimated to be valued between $125 million and $140 million.

Dalco Nonwovens, headquartered in Conover, North Carolina, manufactures needlepunch nonwoven fabrics catering to the automotive, geotextile, and industrial segments. The company is currently owned by Snow Peak Capital, a Boulder, Colorado-based private equity firm that acquired Dalco in 2022 and is now looking to offload.

Sources indicate that Lincoln International, the US-based mid-market investment bank, is acting as the sell-side advisor on the transaction.

The acquisition would mark Arvind's first significant manufacturing foothold in the United States and comes at a time when American buyers are actively diversifying supply chains away from China amid ongoing tariff pressures. A domestic US manufacturing base would allow Arvind to service American automotive and industrial clients without the exposure to import duties that currently weigh on Indian exporters.

Funding the deal will require Arvind to stretch its balance sheet. The company ended Q4 FY25 with cash and cash equivalents of approximately ₹827 crore, roughly $98 million at current exchange rates, which falls short of the estimated deal value. The acquisition is expected to be funded through a combination of internal accruals and fresh offshore debt, likely structured as an external commercial borrowing or an overseas acquisition financing facility, as per sources.

Arvind's consolidated debt-to-equity ratio stands at 0.42, suggesting the headroom exists to take on additional leverage. For full year FY25, the company generated free cash flow of ₹760 crore and reported EBITDA of ₹919 crore. Arvind Advanced Materials contributed ₹1,544 crore in revenue and ₹234 crore in EBITDA for the year, with margins close to 15%.

At $125-140 million, this would represent one of the largest overseas acquisitions in Arvind's history.

Dalco Nonwovens is a needlepunch nonwovens specialist serving Tier 1 and Tier 2 automotive customers, home furnishings manufacturers, industrial converters, and geotextile applications. Snow Peak Capital acquired Dalco alongside Global Felt Technologies in 2022 as part of a platform investment in specialty nonwovens manufacturing.

Arvind Advanced Materials is the technical textiles and advanced fabrics division of Arvind Limited, the Ahmedabad-based textile conglomerate controlled by the Lalbhai family. The division focuses on human protection fabrics, industrial filtration, automotive interiors, composites, and coated fabrics, and operates across both domestic and export markets.

(CNBC-TV18 reached out to Arvind Limited and Dalco Nonwovens for comment. Neither has responded to queries at the time of publication.)