Indian retailers on an expansion spree

It seems Indian retailers are on an expansion spree, either by drawing up new capex plans or by getting into newer categories. Aditya Birla Group controlled Grasim Industries has drawn up capex plan of Rs 150 crore for product development, R&D and business development for its new fabric brand Liva in the next fiscal.
Also luxury watch retailer Ethos Watch Boutiques is diversifying into other categories. It has tied up with Mont Blanc for writing instruments and men’s accessories, and reached an agreement with Chopard to sell its products at its outlets in India.
Meanwhile, the private equity arm of Louis Vuitton Moet Hennessy (LVMH), the world’s largest luxury goods conglomerate, plans to sell its stake in ethnic wear retailer Fabindia Overseas.
Grasim draws a capex plan of Rs 150 crore for Liva
Grasim Industries Managing Director KK Maheshwari said in a media report: “We are looking at spending around Rs 150 crore for product and application development, R&D and business development for Liva, a fibre brand launched earlier this year to target retail customers.”
The usage of viscose staple fi bre (VSF) is already catching up among domestic processors with VSF-made winter collection expected to go up from 20 lakh garments this year to about 50 lakh garments next winter season, Maheshwari said. The Aditya Birla group company has enhanced its VSF production capacity in March from 1,20,000 tonnes per annum to 5,00,000 tpa with the completion of the last phase of its greenfield project at Vilayat in Gujarat. The company sells about 3,00,000 tonnes of VSF in domestic market and the rest is exported.
Globally, the annual demand growth for VSF is about four per cent. The biggest challenge, Maheshwari said, is to widen the market base by promoting garments made of VSF. “While the cotton production has limitations worldwide, the consumer demand for natural and comfortable fabrics is growing in India. We see this as an opportunity and are trying to reach out to the consumer with the Liva brand”, he added in the media report. To reach the end-consumer, the company has partnered with designers.
Till now we have been supplying the fibre to major fashion and home textile brands like Pantaloon, Van Heusen, Global Desi, Allen Solly and looking at tie ups with more brands, he said. As part of national drive Liva Accredited Partner Forum (LAPF), Birla Cellulose, the pulp and fibre division of Grasim, is organising a stakeholder conclave in various parts of the country. LAPF is aimed at improving the entire gamut of the textile value-chain. Grasim has over 335 partners including spinners, weavers, knitters and fabricators, with major participation from textile hubs in the LAPF.
“Our plan is to strengthen the textile value chain and align it with the ‘Make in India’ campaign of the government”, Maheshwari said in the media report.
L capital plans to sell stake of Fabindia overseas
The private equity arm of Louis Vuitton Moet Hennessy (LVMH), the world’s largest luxury goods conglomerate, plans to sell its stake in ethnic wear retailer Fabindia Overseas, according to a media report. L Capital is targeting $100 million ( Rs 660 crore) for its 8 per cent holding in the unlisted Indian company, more than four times the investment it made in 2012. “L Capital had approached some advisers about two months back for determining the valuation of its stake in Fabindia. Now they are looking for an exit,” the media report suggested.
It has so far contacted at least four potential buyers: Singapore government owned Temasek, and PE firms Actis, Apax Partners and the Carlyle Group. The process has just started and the PE players are looking at it. The negotiations are expected to open by next month.
L Capital bought the stake in 2012 from Wolfensohn Capital Partners for Rs 150 crore, at the time valuing the company at Rs 1,875 crore. If L Capital gets the price it is looking for, the deal will value Fabindia at about Rs 8,200 crore. There was a clause in the 2012 deal allowing Fabindia to buy back the stake at a certain performance based price if L Capital wanted to exit but couldn’t find a buyer, the media report suggested. In fact the valuations are pegged as per that. New Delhi-based Fabindia has more than 200 stores in 79 locations. It has a customer base of 3 million, which it wants to expand to 10 million in three to four years.
According to industry experts, in terms of same-store sales and absolute growth, Fabindia has done quite well in the past three-four years. Also, in terms of profitability, it’s among the best retail businesses in the country. The company has successfully created a strong brand in a largely unorganised market and its sourcing network and loyalty base give it a competitive advantage. Fabindia is the only Indian company where L Capital has an investment. Earlier it was reported that the family-run LVMH, which houses brands such as Louis Vuitton, Christian Dior and Moet Hennessy, will hand over distribution of its watch brands Tag Heuer and Dior in India to a local agent owing to sagging sales. France-based LVMH stated in October that it recorded an 18 per cent increase in global revenue, reaching 25.3 billion Euros, for the first nine months of 2015.
The company said it would continue with its strategy focused on targeted geographic expansion in the most promising markets in an uncertain economic and financial environment. L Capital invested in Fabindia through its $640-million Asia fund, whose other investments include Pepe Jeans, Princess Yachts and Grant.
Ethos to diversify into other categories
Luxury watches retailer Ethos Watch Boutiques is diversifying into other categories. It has tied up with Mont Blanc for writing instruments and men’s accessories, and reached an agreement with Chopard to sell its products at its outlets in India.Ethos, which retails watch brands like
Rolex, Omega, Jaeger Le Coultre and Breguet, has tied up with Germany’s Mont Blanc and Swiss-based Chopard to market their products in the country. It is in talks with other luxury brands for eyewear and is also considering launching its own brand for men’s accessories.
“We’re starting with products that have close affinity to the watch business as we think of entering other business categories,” said Yasho Saboo, CEO and founder, Ethos Watch Boutiques in a media report. “The big piece in this is going to be technology. Using the internet in our digital platform, we are planning to create an asset light model where we can put up brand products without having to invest too much in them.” Saboo said if the model is successful, it may look at other products. “Branded jewellery, especially international jewellery, hasn’t really taken off in India,” he added in the media report.
Pranav Saboo, Director, E-Commerce and Technology, said the group has been spending time and effort in building the website and on gathering customer information. “Out of 80 lakh customers visiting our website every year, 3 lakh are registering for our loyalty programme. Having built this extensive customer relationship management system, we are thinking of how we can use all of this to move beyond watches,” he said in the media report. He added that the group may look at foraying into unorganised categories like Indian couture and art.
Creindia launches CREvaluation
Delhi-based commercial real estate portal creindia.com has launched its online product CREvaluation, a tool that offers property valuation services online. CREvaluation let users submit a valuation request, and with a few clicks users get the report delivered within 48 to 72 hours at a nominal cost. They even have the option to choose between a Government or Private Valuer.
“It may seem like yet another expense but this report will help users in decision-making related to transactions, property restructuring, insurance, mortgage, among others. It is designed to assist both seller and buyer to receive a fair valuation of the property,” Ajay Rakheja, CEO & Managing Director, said.
The company has also announced a four day online event CRE Bazaar, an online marketplace connecting various stakeholders (Investors, Corporates, Retailers, Professionals, HNI’s/NRI’s, Entrepreneurs etc) in commercial real estate. The bazaar will showcase commercial properties available for rent and sale with attractive offers for a limited period. “The USP of CRE Bazaar lies in showing ready to move commercial properties in a best deal format for a limited time period. All properties will be spot verified and only those properties which are 70 per cent complete or ready to move will be showcased,” added Rakheja.
These products are part of the first phase development of the Creindia portal and involve gathering data from the Delhi NCR region, where the company is based, and then expanding to other regions. The company that has received seed funding over the last year is now looking to increase its database of commercial real estate inventory and showcase listings in the office, retail high street, IT/ITeS and business centre space.