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April 21, 2021
Debojyoti Ghosh, Fortune India
April 21, 2021
Billionaire entrepreneur Kumar Mangalam Birla-led retailer Aditya Birla Fashion and Retail Limited (ABFRL) has continued its build-up in the ethnic wear market with its fourth deal since 2019 and second this year. In February, the Mumbai-based fashion retailer picked up a 33.5% stake in fashion designer Tarun Tahiliani’s Goodview Properties—that will own and operate the designer’s eponymous couture label—for ₹67 crore. That was a month after ABFRL acquired a 51% stake in Kolkata-based designer Sabyasachi Mukherjee’s company, Sabyasachi Couture, which sells garments, accessories, and fine jewellery, for ₹398 crore.
ABFRL, which owns fashion brands such as Louis Philippe and Van Heusen, said in a statement that ethnic wear “is a large and growing market with a significant opportunity to build scale” and expects it to be an important category over the next few years.
Experts note the two recent deals come as the luxury industry, including fashion, has been hammered by the pandemic. The year-long shutdown in global travel has slowed over a decade of growth across luxury categories. Indeed, the global fashion industry’s profit is expected to have slumped about 93% in 2020, according to a report by consulting firm McKinsey and The Business of Fashion in December.
“[Luxury] business has been hit hard during the pandemic, like all fashion and retail businesses. And a significant injection of money is needed to maintain the business momentum, and to scale it further,” says Devangshu Dutta, chief executive of retail consultancy Third Eyesight.
In March, Italy’s billionaire Agnelli family—best known as the founders of automaker Fiat—acquired a 24% stake in French luxury shoemaker Christian Louboutin for $642 million. Three months before that it paid $95 million for a controlling stake in Shang Xia Paris, a Chinese luxury goods business founded by French luxury brand Hermès and Chinese designer Jiang Qiong Er.
Many fashion firms have used the Covid-19-induced slowdown to reshape business models, streamline operations, and sharpen their customer propositions, said the report by McKinsey and The Business of Fashion.
And that is exactly what Tahiliani plans to do with his new corporate partner. The duo will create a new entity—80% held by ABFRL and 20% by Tahiliani—to launch a new brand of apparel and accessories in the affordable premium ethnic wear segment, while it also plans to launch a men’s ethnic wear brand.
“Discussions with ABFRL have been in the works for nearly two years. I couldn’t be happier about entering into this partnership. They understand scale and numbers like no one else in the market today. Each of their home-grown brands is a resounding success,” Tahiliani, founder and CEO of Tarun Tahiliani Brand, tells Fortune India. “This collaboration permits me the financial freedom to focus on designing,” he adds.
ABFRL aims to build the new ethnic wear brand into a ₹500-crore business in the next five years, with more than 250 stores across India. The first tranche of stores is expected to open by September. “This new entity with ABFRL currently concentrates only on menswear. In our collective opinion, at present, there is only one branded national player in the Indian ethnic [wear] for men space. In order to scale this up, we need to be in three or four categories of clothing. This will give depth, both in terms of style and sizing to the men who come into the store,” says Tahiliani.
Currently, the top panIndia ethnic wear brand for men is Vedant Fashions’ Manyavar. The Kolkata-based company forayed into women’s wear in 2016 selling lehengas, saris, and the like under the label Mohey,
ABFRL’s previous deals in the segment—both in 2019—were a 51% stake in fashion designers Shantanu & Nikhil’s Finesse International Design for a reported ₹60 crore, and its ₹110-crore acquisition of Jaypore. Both make apparel, footwear, accessories, and other items.
ABFRL’s managing director, Ashish Dikshit, declined to comment for this story. ABFRL had, when announcing the Sabyasachi Couture investment, said it expected that deal to accelerate its strategy to build a comprehensive portfolio of brands across segments, occasions, and geographies.
Experts say ABFRL’s recent investments allow it to tap into the designer’s creative stream and goodwill, while providing the financial and organisational muscle of a large corporate. Albeit one that is not aiming too far upmarket.
“We shouldn’t see the ABFRL [stake] acquisitions as entry into couture, which is a different business from the ready-to-wear market. It is the expansion of these brands into ready-to-wear, tapping into the desirability of the designer brand, while making it accessible and affordable to a larger market is what will be of interest,” says Third Eyesight’s Dutta.
Indeed, Mukherjee, in a press release in late January, noted, “As my brand evolved and matured, I began searching for the right partner in order to ensure continuity and long-term sustainable growth.”
Nonita Kalra, a veteran fashion editor, says that the ABFRL deal shows the growing heft of the [Sabyasachi] brand in the fashion business. “Corporates aren’t sentimental. They are hard-nosed about investments, with careful due-diligence. ABFRL is paying what it is worth and expecting it to grow bigger. They are never going to invest in a stagnant business,” she says.
Experts, though, caution that while corporate partnerships and acquisitions allow a designer-entrepreneur and their investor partners to unlock some of the value being built, it is essential to have clarity about each brand’s design language and target consumer. “With [ABFRL’s] new venture [in men’s ethnic wear with Tahiliani], the key thing to understand is how the company will differentiate it from Shantanu & Nikhil’s positioning and focus, which is also menswear-driven,” says Abneesh Roy, executive vice president, Edelweiss Securities. “The challenge will be ensuring that each brand maintains its distinctive identity, while deriving synergies from the group.”
ABFRL has stitched up some unique deals; it now has to ensure they don’t unravel.
(The story originally appeared in Fortune India‘s April 2021 issue).
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April 14, 2021
Written By zenger.news
CHENNAI, India — American tech mogul Jeff Bezos, who owns Amazon, had one billionaire to fight in the Indian e-commerce space — Mukesh Ambani, who owns Reliance Industries. Now, another — Gautam Adani, who owns the Adani Group — has put a leg into India’s highly competitive e-commerce market, which is expected to grow to $200 billion by 2026.
Walmart-owned, and one of India’s largest e-commerce firms, Flipkart has inked a deal with multinational conglomerate Adani Group to build one of its largest fulfillment centers in the financial capital Mumbai.
The fulfillment center, a distribution facility where inventory is stored, so online orders can be picked, packed, and processed, is expected to boost Flipkart’s supply chain capabilities in a tightly contested three-pronged e-commerce race.
Flipkart and Adani Group have not disclosed the financial terms of the agreement. Adani Logistics, a unit of Adani Ports & Special Economic Zone Ltd, will build a 534,000 square foot fulfillment center and lease it to Flipkart to meet the “growing demand for e-commerce in India’s western region”.
“This broad-ranging partnership across our logistics and data center businesses is a unique business model, and we see this as a great opportunity to serve Flipkart’s physical as well as digital infrastructure needs,” Karan Adani, chief executive officer of Adani Ports and Special Economic Zone, said in a joint statement on April 12.
The facility, which can house 10 million inventory units and is roughly the size of nine football fields, is expected to be operational in the third quarter of 2022.
Based in India’s tech capital Bengaluru, Flipkart will also develop its third data center at AdaniConneX Pvt Ltd in the south Indian city of Chennai to store data locally. AdaniConneX is a recently formed joint venture between U.S. EdgeConneX and Adani Enterprises, the flagship company of Adani Group, to provide data center solutions.
The deal will indirectly pit billionaire Adani against India’s richest man Ambani and Bezos.
“The big thing for all e-commerce companies and companies like Adani is having real estate in the right location and offer services and facilities on top of that,” Ashutosh Sharma, vice-president and research director at Forrester Research, India, told Zenger News.
“Having warehouses and distribution centers built closer to import hubs such as Mumbai, Vishakapatnam, and Chennai is a huge advantage. Adani already has a huge presence in these ports and the real estate in those coastal cities. It allows them to handle the shipment, and companies like Flipkart need this kind of capability,” Sharma said.
Flipkart has not disclosed the number of its fulfillment centers in India, but industry estimates vary between 50 and 60. Rival Amazon India said it has 60 such centers across 15 states as of July 2020.
As Amazon and Reliance Industries invest in scaling up their warehousing facilities, Flipkart is following suit and has been steadily investing in its logistics and supply chain capabilities for a while.
In December 2019, it led the $60-million investment round in last-mile delivery start-up Shadowfax. The same month, Flipkart and its parent Walmart participated in a $15-million investment round for fresh produce supply start-up Ninjacart and again invested $30 million in the start-up in October 2020, as per data from the company research platform Tracxn.
Flipkart has also invested in freight service provider BlackBuck.
“An e-commerce business is not limited to simply developing a website and selling goods online, but it depends heavily on efficient supply chain management,” Karan Chechi, director at TechSci Research, told Zenger News.
“The expansion of the facility in one of the most demanded Indian cities is expected to help Flipkart gain a competitive edge over the other existing e-commerce players in the country.”
Amazon and Reliance Retail, part of Reliance Industries, have also pumped money into their e-commerce operations.
Image of an Amazon warehouse unit. (Matt Cardy/Getty Images) The latter bought Future Group’s Retail unit for $3.4 billion and is involved in a legal battle with Amazon India, who is opposing the deal. With the deal, Reliance also acquired Future Retail’s vast logistics and warehousing business.
Last year, Reliance bought a minority stake in lingerie retailer Zivame for an undisclosed amount. Amazon Technologies acquired retail tech start-up Perpule in March this year for $14.7 million.
The nationwide lockdown last year in India due to the pandemic saw e-commerce firms ramping up their warehouse facilities to meet a surge in demand as most of the country was confined to their homes.
“At present, the pan-India footprint of e-commerce warehousing is 4.6 million square meters (49 million square feet), and more than half of it is occupied by a single player, Amazon,” according to a report from real estate consultancy Knight Frank.
Flipkart is in second place with around 15 percent share, while the total occupancy of the top two e-commerce players is about 70-75 percent, the report notes.
The Indian warehousing market is expected to grow at a compound annual growth rate of 9.8 percent to reach $19.53 billion by 2025, as per a Research & Markets release.
Flipkart’s parent Walmart entered the Indian market in 2007 with its business-to-business (B2B) joint venture with Bharti Enterprises, another multinational conglomerate.
“If you look at it from Walmart’s perspective, they had partnerships from the beginning before they entered the market,” Devangshu Dutta, chief executive officer of retail and e-commerce consulting firm Third Eyesight, told Zenger News.
“If you look at the current environment, Adani or Reliance is a good partner to have. Flipkart’s deal is for logistics and data, and it’s not like 100 percent of their fortunes are tied to Adani. It probably provides some cushion against the market pressures that might happen,” Dutta said.
Source: jacksonvillefreepress
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March 11, 2021
Written By RANJITA GANESAN
Aditya Birla Fashion and Retail Ltd (ABFRL) has bought significant stakes in luxury couture businesses of fashion designers Sabyasachi and Tarun Tahiliani. What is the business rationale? Read on
The opportunity in Indian wear, or ethnic wear as it is often called, has come to the attention of corporate and private equity investors over the last few years. (Image: Unsplash.com)
To up for an occasion, women can get away with a beautiful saree, kajal, and flowers, said Tarun Tahiliani. Most men, in his view, have to choose from contrasting options such as western shirts or ‘maharaja’ glad rags. “There is a lovely space in between, a kind of contemporary Indian style, which has not reached them yet.”
The couturier—known for pairing Indian silhouettes with modern construction and layering—intends to fill that gap on the racks with a new ready-to-wear brand of celebration wear for men. “The pieces themselves will be toned down and elegant so they can be styled as needed.”
This foray into retail is through a recent Rs 67 crore deal with Aditya Birla Fashion and Retail Ltd (ABFRL), which Tahiliani describes as the yang to his yin. The partners expect to build a business worth Rs 500 crore in the next five years with 250 stores, the first of which will open in September.
The Mumbai-based designer’s pret menswear typically brings in anywhere from Rs 40,000 to Rs 4 lakh a piece. The unnamed new brand, where he will hold a 20 percent stake while the corporate partner will own the remaining 80 percent, will be in the more affordable bridge-to-luxury category. ABFRL also acquired 33.5 percent of Tahiliani’s existing couture label.
For ABFRL, this is the latest in a series of bets on Indian wear by celebrity designers. It bought a 51 percent stake in Sabyasachi for Rs 398 crore in January, and in 2019, it struck a partnership with designer duo Shantanu and Nikhil. “Acquisitions of majority stakes with designers allows the group to tap into the designer’s creative steam and goodwill, while providing the financial and organisational muscle of a large corporate,” said Devangshu Dutta, chief executive of retail consultancy Third Eyesight. “The challenge will be ensuring that each of the brands maintains its distinctive identity and handwriting, while deriving the benefits of being part of a larger group.”
The opportunity in Indian wear, or ethnic wear as it is often called, has come to the attention of corporate and private equity investors over the last few years. It is a US$19 billion market as of 2020, according to Technopak Advisors. By most accounts, at least 70 percent of it still remains unorganised, dominated by unbranded stores and tailors.
The premium-end of the market is growing at 10 percent, Technopak notes. “Given ethnic wear sees no competition from global brands, it is a natural choice for investments,” points out Abha Agarwal who co-heads the consumer vertical at Avendus Capital. Where the majority of Indian wear offerings are aimed at women, men’s wear remains a smaller piece, so far dominated by brands like Manyavar. Various religious festivals and even Republic Day and Independence Day — in a nationalism-charged environment — are viewed as fresh occasions for marketing Indian wear.
Importantly, weddings becoming bigger and fatter has boosted growth and acceptance of the segment. “Each wedding is 2-3 days long now and you need different outfits for all the events — mehendi, sangeet, the vows,” explained Yash Dongre, business head for House of Anita Dongre. “So Indian designer wear is finally being looked at as a serious business.” Anita Dongre, who popularised gota patti-embellished lehengas and jackets, was among the first Indian couturiers to scale up and raise institutional funds.
Thriving Business
Apart from her eponymous label, the company launched ethnic fusion wear brand Global Desi and AND-branded western wear with investments from retailer Future Group and private equity firm General Atlantic.
With Indian wear accounting for 60 percent of its offerings, House of Anita Dongre says it is growing about 20-25 percent year on year. Beyond bespoke bridal outfits, which take time to make, half its collections are kurtas, tunics and sarees that are picked up anywhere between Rs 12,000 and Rs 70,000 apiece.
After Sabyasachi deal, Aditya Birla Fashion and Retail announces strategic partnership with designer Tarun Tahiliani
The company plans to grow those offerings especially in its online business, which it hopes to double over the next months. Dongre paints the expansion of more players as both competition and an advantage. Noting the example of districts like Delhi’s Mehrauli or Banjara Hills in Hyderabad, he says, “Established and emerging designers have set up shop there and that generates traffic for everyone in the area. This will only get everyone to up their game.”
For designers, translating high fashion for a mass retail format without diluting their brand’s ethos can be a delicate dance. “I am conscious about the environment so I was clear about no compromises like using polyester,” said Anju Modi. She chose to partner with handloom-friendly chain Biba, which has about 255 stores countrywide, creating designs with ‘ikat’, ‘bandhini’ and block-printed cottons which are easy to reproduce in large numbers. “In my atelier, all our time and money is focused on developing products with a scientific attention to detail. So to market and distribute at scale I knew I needed to collaborate.”
Why Partnerships Make Sense
Buoyed by demand, more designers are seeking partners to share the high spends involved in marketing and opening stores. “Although my brand was among the first to have an online shop, I took a conservative approach to store openings,” said couturier Neeta Lulla, well-known for draping Bollywood stars.
Ideas For Profit | Aditya Birla Fashion and Retail: With reduction in debt, this fashion giant is poised for the next growth leg
“I see the market and scalability today, and am open to experimenting and restructuring.”
Not just within India, she said top traditional wear designers have a big market in NRIs who are buying online.
There are challenges in the segment, however. The unorganised part of the Indian wear market is still huge, especially in the low to mid-value, noted Technopak’s Amit Gugnani. Further, demand is not uniform as the preferred colours and fabrics vary from region to region. “There is so much heterogeneity in the way India is geographically, you may need product differentiation or else remain in niche geographies,” he added.
The pandemic too brings a note of caution to future plans. Raymond, which launched its Ethnix brand in 2017, says it saw double-digit sales growth except in 2020. The disruption of the last 10-12 months has meant expansion of that ready-to-wear chain, with 32 stores currently, is currently on hold.
Tahiliani said the initial store rollout will be slow and steady as the two partners work on production, marketing campaigns, an online store, and testing customer reaction. But the designer is convinced the future is in retailing. “No one has the time or energy to choose fabrics and go to the tailor. People want to see, they want to try, and then buy. That’s the way of the world now.”
Source: moneycontrol
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February 24, 2021
Written By DEBOJYOTI GHOSH
After acquiring 51% in Sabyasachi Mukherjee’s fashion house, Kumar Mangalam Birla-led ABFRL has picked up a 33.5% stake in Tarun Tahiliani’s couture label.
Tarun Tahiliani, founder and CEO, Tarun Tahiliani Brand
Billionaire Kumar Mangalam Birla-led fashion retailer Aditya Birla Fashion and Retail Limited (ABFRL) has announced its second deal with an Indian designer brand in less than a month. The Mumbai-based retailer on Wednesday said that it has acquired a 33.5% stake in fashion designer Tarun Tahiliani’s Goodview Properties Private Ltd (GPPL)— that will own and operate the designer’s eponymous couture label—for ₹67 crore.
The deal comes close on the heels of ABFRL acquiring a 51% stake in Kolkata-based fashion designer Sabyasachi Mukherjee’s company, Sabyasachi Couture, for ₹398 crore late last month. Sabyasachi Couture sells garments, accessories, and fine jewellery under the Kolkata-based designer’s eponymous label.
ABFRL, which owns fashion brands such as Peter England, Louis Philippe, and Van Heusen, said that it has also acquired a 80% stake in a new unnamed entity, as part of the deal with Tahiliani (who will own the rest of the entity). In the new business, ABFRL will collaborate with Tahiliani to develop and launch a new brand of apparel and accessories in the affordable premium ethnic wear segment, the fashion retailer noted in a release. It will soon launch a men’s ethnic wear brand, it added. The new brand will aim to build a ₹500-crore business in the next five years with more than 250 stores across the country. It is looking to launch the first tranche of stores by September.
Commenting on the valuation of the deal Abneesh Roy, executive vice president, Edelweiss Securities, pointed out that considering ABFRL had paid ₹67 crore for a 33.5% stake, it values the existing business of Tahiliani at ₹200 crore. “The deal multiple comes to 3.3x FY20 sales, similar to the multiple paid for Sabyasachi [Mukherjee].
”In FY20, Sabyasachi Couture had posted a revenue of ₹274 crore.
“We believe that over the next few years, ethnic wear is going to be an important category as confident Indians rediscover their culture and heritage. Tarun Tahiliani has been at the forefront of the emergence of the Indian design industry. We are proud to partner with him to launch a new brand that gives the emerging Indian consumer a new range of celebration wear reflecting the unmatched, exquisite design excellence at more accessible prices,” Ashish Dikshit, managing director, ABFRL, said in a statement.
As part of the deal, ABFRL will have the option to increase its stake to 51% in Tahiliani’s couture business in the next few years.
Besides the two deals this year, ABFRL has made two key acquisitions in the Indian ethnic wear and lifestyle space in the past. In 2019, it picked up a 51% stake in fashion designers Shantanu & Nikhil’s Finesse International Design, which makes bespoke apparel, footwear, and accessories for men and women, reportedly for ₹60 crore. The same year, it also acquired ethnic wear and lifestyle retailer Jaypore for ₹110 crore.
“From the recent acquisitions it is clear, ABFRL is betting big on ethnic [wear] as it has nearly five brands in the portfolio now: Sabyasachi, Shantanu & Nikhil, Jaypore, the new brand with Tahiliani, and Pantaloons (economy range),” Roy said, adding that ABFRL will have to strategise on driving scale and synergies with its existing businesses, besides managing the cultural aspects of these [acquired] companies.
“With [ABFRL’s] new venture [in men’s ethnic wear with Tahiliani], the key thing to understand is how the company will differentiate it from Shantanu & Nikhil’s positioning and focus, which is also menswear-driven,” Roy said.
As part of the deal, Tahiliani Design Private Limited (TDPL), which currently runs the garments and accessories business under the Tarun Tahiliani brand, will be transferred to GPPL. TDPL, which was incorporated in 2002, posted a revenue of ₹69 crore in FY18, followed by ₹72 crore in FY19 and ₹67 crore in FY20.
“Last year, we celebrated 25 years of the Tarun Tahiliani label. The next big leap for the brand was to take our craftsmanship and expertise and offer it to a larger Indian market that knows and values quality and is actively seeking it. I was clear that we needed a partner who could not just help us with this scale, but also have the same dedication to quality and the customer,” Tahiliani, founder and CEO, Tarun Tahiliani Brand, said in a release.
Industry experts point out that corporate partnerships and acquisitions allow a designer-entrepreneur and his/her investor partners to unlock some of the value that is being built.
“There may be benefits from operational and systems disciplines, sourcing strengths, the financial muscle of a larger partner, but the brand and its intrinsic identity must not be diluted. If the brand has to maintain its cachet, its distinctiveness, it would need to be allowed to run with significant independence on the product and the customer experience side,” Devangshu Dutta, chief executive of retail consultancy Third Eyesight had told Fortune India when ABFRL announced its deal with designer Mukherjee in late January.
Shares of ABFRL closed at ₹179.25, up 6.54%, on the BSE on Wednesday, while the Sensex was up 2%.
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Source: fortuneindia
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February 17, 2021
Written By Shivani Shinde & Samreen Ahmed
The deal is the biggest in online groceries space so far, values BigBasket at Rs 13,500 cr; will give exit to investors Alibaba, Abraaj and IFC
The total size of the e-grocery market in the country is expected to grow from $1.9 billion in 2019 to $3 billion by the end of 2020
The Tata Group is in the final stages of acquiring a majority stake of 68 per cent in Supermarket Grocery Supplies, which runs and operates online grocery brand BigBasket, for about Rs 9,300-9,500 crore, said a source close to the development. The deal — biggest in the online grocery space so far—values BigBasket at Rs 13,500 crore (around $1.85 billion). This comes about 20 months after the Hari Menon-led Bengaluru company had entered the unicorn club (companies with valuation of at least $1 billion).
The deal, which is expected to close in the next four to five weeks, will give exit to investors Alibaba, Abraaj Group and IFC. The parties are awaiting approval from the Competition Commission of India (CCI).
The top management, including co-founder and CEO Hari Menon, will continue to stay on board, said the source. The Tata Group and BigBasket refused to comment on the matter.
The acquisition of BigBasket fits the Tata Group’s plans for serious online play. Tata Sons Chairman N Chandrasekaran has in the recent past talked about the group’s ambitions to have a super app.
“Our e-commerce play will be really big and we’ll not contend with a minor stake in any company,” a Tata Group spokesperson had last year said in response to a potential stake purchase in BigBasket.
“BigBasket has created a significant presence in the online space that has got certified further in the past 12 months. For Tatas to make a transition from a physical to a digital space, an inorganic route makes more sense,” said analyst and chief executive of Third Eyesight Devangshu Dutta. This transaction would allow the conglomerate access to a large customer base.
According to a RedSeer and BigBasket report, the total size of the e-grocery market in the country is expected to grow from $1.9 billion in 2019 to $3 billion by the end of 2020. At an annual growth rate of 57 per cent, it is expected to touch $18 billion by 2024.
With big names including Tatas, Amazon, Reliance, Walmart-owned Flipkart and Udaan making their presence felt in this space, e-grocery is emerging as one of the most coveted retail segments. As marquee players line up, BigBasket will need serious money to remain a leader in the game, according to experts. Hence, a deal with the Tatas coming in as a strategic partner makes perfect sense, they say.
Supermarket Grocery had reported a consolidated net loss of Rs 611 crore in FY20, a 6.7 per cent rise from Rs 572 crore in the previous year. The company posted a 36 per cent jump in revenue at Rs 3,822 crore in FY20, according to business intelligence platform Tofler.
BigBasket had earlier said it had seen an almost 84 per cent increase in the number of new customers accompanied by 50 per cent higher retention rates during the pandemic, compared to the pre-Covid levels. The Alibaba-backed company is currently recording about 20 million orders per month and reached the milestone of $1 billion run-rate in annual revenues last year.
Source: business-standard
