The Hindu Business Line : Benetton to buy out DCM for Rs 15 cr

THE global apparel major Benetton will buy out 50 per cent stake of its joint venture partner in India, DCM group, for roughly Rs 15 crore. The Italy-based Benetton has received the Foreign Investment Promotion Board's nod to carry out the transaction which is likely to be completed shortly.

"We are in the midst of transition now and the physical transfer of shares is slated to happen shortly. The value of the transaction is expected to be around Rs 15 crore," said an informed source. This will bring to an end a more than a decade-old joint venture - DCM Benetton India Ltd, that steered the United Colours of Benetton brand in the country. One of the founders and the current Chairman of Benetton, Mr Luciano Benetton, is scheduled to visit India soon to mark a new phase in its operations in the local market.

Benetton operates about 60 retail stores in India and has revenues in excess of Rs 50 crore. However, its profitability declined during recent years with competitive pressures limiting its pricing flexibility and increasing its promotional expenditure. The defunct joint venture with DCM, which focused on women, children and accessories segments, derived strength from its parent that supported by allowing it flexibility in meeting royalty commitments.

Benetton is revamping its top management in the wake of the equity buyout. Mr Madhu Kumar, a former Levis Strauss India official, who joined the soon-to-be dissolved joint venture as Chief Operating Officer (COO), will head Benetton's operations as Chief Executive following the exit of DCM. Benetton is also roping in Mr Sanjeev Mohanty, head of SF Jeans, a denim brand from the Madura Garments stable, as Vice-President to look after integrated marketing, sales and retail functions.

It must be mentioned that Mr Vivek Bharat Ram of DCM group headed the joint venture as Chairman and Managing Director, while a Benetton nominee, Mr Maurice Murraro, occupied the slot of Joint Managing Director. It is learnt that Benetton is unlikely to appoint a new Chairman, and Mr Kumar, as operational head, will report to the company's Asia Pacific Director based in Hong Kong. The new management wants to make Benetton more customer-focused in its approach in the domestic market and is likely to unleash new retail and visual merchandising plans to impart it a more international flavour.

Over the next two to three years, the new management expects to more than double its existing retail network and nullify the brand's northern bias by focusing on expansion in the West, South and East markets.

More Stories on : Retailing | Mergers & Acquisitions | Readymade Garments

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