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Footwear maker Pavers England, which along with Swedish furniture maker Ikea, was among the first two to apply for 100 per cent foreign direct investment in single-brand retail, expects to receive clearance from the Foreign Investment Promotion Board (FIPB) soon.
Pavers Foresight Smart Venture Mauritius, a $60 million equal joint venture between the UK-based Pavers and Foresight group, had applied in January to invest $20 million in Pavers England, the Indian company retailing footwear, presently through a master franchise.
The delay in approval, explained Utsav Seth, MD & CEO, Pavers England, was because the FIPB wanted clarity on which company owned the brand. The rules for single-brand retail stipulate that the company making the FDI proposal needs to also own the brand and not a different entity.
Pavers filed documents a few weeks ago to confirm that the brand is owned by Pavers Foresight Smart Venture, the company which has applied to make the FDI. Pavers England India is a 100 per cent subsidiary of the Mauritius-based company.
The foreign direct investment, once cleared, will happen over a period of 24 months, said Seth.
Nor does the 30 per cent local sourcing requirement from small and medium enterprises faze him, since, he said, Pavers was already doing it. Seth said that Pavers England has been sourcing almost 40 per cent of its brand requirements from India and the rest from Vietnam, Italy and China.
Asked why Pavers does not prefer the franchise route to expand, Seth said emphatically, “The franchise route is difficult to control when you're expanding. The ability of franchisee partners to finance and scale up is limited. We have 26 stores now and 70 shop-in-shops. We want to add 100 stores in the next 36 months.”
The master franchisee for Pavers England is Triton Retail. Pavers will invest in Triton or may acquire 100 per cent and take over the retail operations once it gets the go-ahead from the Government, says Seth.
The organised retail market for footwear is around Rs 7,500 crore and growing at 15 per cent a year. The market for premium footwear is growing even faster at 30 per cent a year.
Pavers, with Rs 55 crore in revenues last year, expects to double sales this year. And, it expects to break even by 2013-14. Ravi Mehrotra, Chairman of the Foresight group, said the plan is to go in for an IPO for the footwear company in 2016. The brand has expanded its portfolio from men’s and women’s footwear to ladies bags, belts and other accessories.
> vinay.kamath@ thehindu.co.in
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