The Hindu Business Line : Louis Vuitton picking up 20% stake in Hidesign

New Delhi April 23 French luxury brand Louis Vuitton (LV) from the LVMH (Moet Hennessy Louis Vuitton) stable has decided to pick up a 20 per cent stake in the Puducherry-based luxury leather goods maker Hidesign.

"Louis Vuitton is going to buy a 20 per cent stake in our company. Though the process has started, the deal will be finalised only after restructuring in Hidesign is finished," said Mr Dilip Kapur, President, Hidesign.

Three verticals

The Indian leather company currently does business under three verticals — Akela, Hidesign Boutique and Hidesign — all of which are undergoing consolidation that will take another two months to be completed.

Meanwhile, officials from Louis Vuitton are set to visit the company's unit at Puducherry on May 7 to conduct an audit that will identify the changes required in Hidesign's technical expertise, machinery, planning, buildings and quality of products to put the Indian firm on par with its French counterpart. Though LV would not be sourcing goods from Hidesign, the association with the French luxury goods leader will give the Indian company the ability to leverage LV's formidable reputation in markets worldwide and get a foothold in new markets.

Craftsmanship

LVMH in turn is understood to have identified the Indian premium leather accessories brand as a partner as it sees a similarity in the way Hidesign approaches craftsmanship. As a leather industry expert put it, a luxury brand needs a touch of exclusivity, which can never come out of China, even though its productivity is higher.

Hidesign will also help LV combat competition in important Asian markets like Japan and China, where the US-based Coach is fast gaining ground.

Mr Kapur said that the European and the German head of LV are going to be in Puducherry sometime in the middle of next month to discuss issues.

"We won't start using LV's name till after six to eight months, as there is still a lot to learn from their expertise in the luxury market before we start venturing further."

To Hike production

Hidesign, with the investment from LV, will set up two new production units in Puducherry which will increase its manufacturing capacity by 53 per cent. Mr Kapur said, "The money we receive will help us to set up two new manufacturing units as well as revamp our existing facilities. We will also heavily invest on machinery."

In the meantime, Hidesign is also undergoing a change in image in terms of its products, marketing and store outlay. "Earlier all our stores were very brown, wood-oriented and masculine. But now we are giving our stores a feminine look.

"The golden brass fixtures, teak wood flooring and leather walls and furniture will emphasise a sense of natural luxury and elegance inherent to the Hidesign brand," said Mr Kapur.

Most of the new stores to be opened will use this format.

Turnover

Hidesign clocked a turnover of around Rs 100 crore in 2006-07.

"Though we expect a growth of 30 per cent in revenues after the buy-in and facility expansions, growth rates will be much higher if our plans in China unfurl at the same speed. We already have two of the biggest retailers of China as our partners for our Chinese expansion," said Mr Kapur.

More Stories on : Mergers & Acquisitions | Brands | Leather

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