Global luxury brands have begun their march into the red hot Indian retail sector. Louis Vuitton Malletier (LVM), the world’s largest brand in fashion and leather goods, is acquiring zn existing Indian company which has a distribution arrangement with LVM to sell its products through two stores in India.

This would be the first case of FDI in retail after the government relaxed norms where a multiple branded group is entering through a new venture for retailing luxury products under a single brand.

LVM is part of the world’s largest luxury goods group Louis Vuitton Moet Hennessey (LVMH). While LVMH is present in India through a number of brands including Tag Heuer and Christian Dior, LVM would operate only Louis Vuitton branded products, through this India venture. The other brands would continue to be sold separately here.

LVM is picking 51% in Mumbai’s LV Trading (LVT India), which has two stores in the country’s financial capital and Delhi. It had entered into a distribution agreement with LVM to sell Louis Vuitton branded products in India.

LVM is picking the majority stake through an investment of Rs 1.5 crore. In addition it is purchasing 2.5 lakh zero coupon redeemable non convertible preference shares at a premium for Rs 2.87 crore.

LVM is also subscribing to fresh zero coupon redeemable non convertible preference shares in LVT India with an investment of upto Rs 1.3 crore. LVM also plans to invest Rs 26.5 crore over a period of five years in India through this venture for expansion.

The remaining 49% in the venture would continue with two resident Indians including BS Trivedi a chartered accountant by profession.

LVM specialises in manufacturing and marketing luxury products in leather goods, ready to wear, shoes, watches, jewellery, textiles, writing instruments, luggage, bags, sunglasses and accessories. LVT is already selling these products through its two stores in India.

The price positioning of Louis Vuitton is at a premium segment. For instance majority of its leather products retail at Rs 25,000 upwards and most of its shoes sell at upwards of Rs 20,000 a pair. LVMH ended the year ’05 with global revenues of $17bn.

largely boosted by growth coming for Louis Vuitton brand which clocked double digit growth. Louis Vuitton, which started as a luggage goods maker in mid 19 century, later diversified into other fashion and luxury products.

(http://economictimes.indiatimes.com)