The major company in the Indian fashion industry, Esprit Holdings has stated that it is likely to assume direct charge of its Indian operations, soon. The officials of the $5-billion group have informed that the group is planning to acquire a 51% stake in a joint venture with Madura Garments, part of the AV Birla Group. The officials added that the Madura Garments is managing Esprits retail stores through a licensing agreement in India at the moment. The sources added that the company has been discussing the possibility of 51:49 JV with the AV Birla Group company for sometime and a breakthrough is likely to come soon.
According to the industry experts, if the deal goes through, this will be the first instance of AV Birla Group inking an equity deal with an international player in the fashion and retail space. The current rules and regulations in India allow a maximum of 51% foreign direct investment (FDI) in single-brand retail. The industry people said that the decision of Esprit is going to be one of the most significant moves after the government opened up specialty retail to overseas investors. However, when contacted, the Business Director (Textile and Apparel) of Aditya Birla Group, Mr. Vikram Rao said, "There is no agreement on a joint venture".
The sources from the industry have informed that the Esprit is having more than 40 doors and it has a significant retail spread at the super-premium end of the domestic apparel market. The company has set an ambitious target of opening up to 150 doors in the country by the year of 2010. The sources added that the Esprit and Madura have cordial ties and the formation of a JV does not have any possibility of making any impact on the existing operational management. The sources further informed that Esprits product range includes menswear, womenswear, kidswear, innerwear and accessories.