When fashionscandal.com posted as early as on the 4th of October, 2013 that L-Capital that has 40% stake in Genesis Luxury is planning to exit, the news was vehemently denied by Genesis Luxury. You can read the post here: http://www.fashionscandal.com/?p=15030
Now the story on L-Capital snapping ties with Genesis Luxury proves itself as news of Genesis and Sahara Group’s talk last week floated in. Sahara Group wants to foray into Luxury Business and has had talks with Genesis Luxury, which valued its business at Rs. 400 crores. The second factor that proves the strained ties between Genesis Luxury and L-Capital is the fact that LVMH has moved the Sephora business to DLF Retail from Genesis Luxury.
But I only wish that the Genesis tying-up with Sahara Group is a wise decision on Sanjay Kapoor’s part. Sahara Group has lots of skeletons in their closet and their business dealings are rarely professional. There are rumours that Subrata Roy and his family will settle abroad and run their empire from outside India. Yes Sahara Group is in an investing spree. They are getting into Defence business with Pipavav, looking to foray into Casino business and Cruise Liners based out of Macedonia and yes, Luxury Retail too is in the plans.
At times you watch a collection of a fashion designer and is so impressed by it that emotions run high and you passionately feel that if this designer had a backing of a venture capitalist, he/she can take on the world. On Day 2 of Wills Lifestyle India Fashion Week, Spring-summer 2014 I felt that way after watching Rahul Mishra’s show. It was an immaculate collection that had the perfect symbiosis of tradition Indian textiles used to create contemporary global styles. The innovative surface texturisation, modern application of traditional Bandhni work and Bengal’s Jaamdani weave, fine detailing using metal zippers and clean construction made Rahul Mishra’s spring-summer 2014 collection a fabulous one.
Designers like Mishra can take on the designers of London, Paris, New York and Milan. Wish they had financial power. Wish India had a ‘fashion philanthropist’ like Sir Philip Green of Topshop. Fashion Tycoon, Green has nurtured young talent and funded them through corpus funds, sponsoring nextGen shows at London Fashion Week and has pledged to help more and more young people get ahead in the designing and manufacturing of clothes. Sir Philip Green is not doing charity. He is investing in the most valuable asset – creative human resource, which eventually bears him fruit.
Indian tycoons are are rarely known for philanthropic work. And when it comes to fashion, it’s a business very few fund managers understand. We have Kishore Biyani who does invest in fashion but plays safe and goes for brands like Global Desi and Biba, which harldly qualifies as ‘fashion’. We have the much-touted L-Capital who would go for iconic names like Sabyasachi and Rohit Bal and after a year are yet to close the deal. We have venture capitalist who are funding illegit E-Commerce business the retails online copy’s of Abercrombie, Polo and Hollister. There are no visionaries who would fund a start-up designer label and there are no agency or advisor who can bring design talents and funders together.
It makes me sad. A Rupees 10Crore fund can take two talented designers and make their label reckoned globally. But there aren’t any to do such small investments in a safe business but many to sink in millions of dollars on E-Commerce companies sprouting like mushroom.
Genesis Luxury is one of the largest players of the luxury business in India and are the franchisee of multiple international luxury brands in India. L-Capital, the Private Equity (PE) arm of LVMH that had invested close to 40% in Genesis Luxury has demanded that its founder either buys out its 40 per cent stake or should sell the luxury brands marketing firm completely.
The reasons behind L-Capital walking out of Genesis Luxury is primarily the performance of the company. Genesis Luxury made Rs 72 lakh profit for the year ending March 2012 on a revenue of Rs 92 crores. L-Capital also had doubts on the way the financial accounts were handled by Genesis Luxury. Ravi Thakran of L-Capital wanted the accounts of Genesis Luxury be audited by top audit firms like KPMG or Ernst & Young but this recommendation wasn’t paid heed to by Sanjay Kapoor, the man behind Genesis Luxury.
Genesis Colors, the parent company of Genesis Luxury incurred a loss of Rs. 6.75 Crores in the year ending March 2012. Now with L-Capital pulling out its 40% stake in Genesis Luxury, it’s going to be a tough task for Kapoor to keep the company afloat.
The Private Equity (PE) arm of Paris-based LVMH Moet Hennessy Louis Vuitton – L Capital with Ravi Thakran at the helm of affairs gave a lot of hope to the Indian Fashion Fraternity to see ‘corporatisation’ of Indian Fashion Industry. Ravi Thakran being an Indian led the Desi fash-frat to unjustifiably believe that L Capital with a corpus fund of $ 650 Million would really see some huge investment in Indian Designer Labels. But as I mentioned – it was an‘unjustifiable’ expectation.
L Capital heavily invested in Genesis Luxury and took 25.5% stake in the company. Here I must say that Sanjay Kapoor of Genesis Luxury who is a former banker must have used his financial expertise to secure that huge chunk of investment from L Capital. Other brand where L Capital picked up stakes was Fabindia – L Capital holds 8% stake.
Finally L Capital turned its focus to the niche segment of Indian designer-wear. The reports of L Capital investing in Rohit Bal and Sabyasachi Mukherjee and in multi-designer retail chain – Evoluzione still stands unconfirmed. The talks are in final stages is what we still hear. This news sparked off various unconfirmed reports that Sabyasachi’s brand has been valued much higher than that of Rohit Bal’s and why Evoluzione and why not Ensemble. Ravi Thakran and Rohit Bal are old friends and when Thakran was heading Omega Watches, he sponsored a grand show of Bal’s at the American Ambassador’s (The Lundquists!) residence where Shahrukh Khan was the show-stopper. Murmurs of L Capital investing in Rohit Bal because Thakran and Bal are buddies had been floating but I personally discount it as gossip as PE firm of L Capital’s stature don’t do business on the basis of friendship. Gossip on why Evoluzione and why not Ensemble has many conspiracy theories.
But it’s high time L Capital comes out with a status report on what’s happening with the investments in Rohit Bal, Sabysachi Mukherjee and Evoluzione. Also how significant is the news that L Capital is planning to replicate the LVMH model in India? This is what I am reading - “Along with consolidating their separate labels under a single corporate structure, each of them will get a chance to scale up and reach domestic as well as global markets. L Capital plans to invest close to Rs 200 crores in the venture, which is being planned as a company that will own significant minority stakes in the design houses of these well-known designers and will forge a joint venture with Evoluzione for back-end distribution business. Gradually, more known designers will be brought on board to expand the business horizons.” Well if this happens I feel it is something the Indian designers always needed and it will definitely be an impetus to the desi designers. If LVMH-type structure comes up in India, it would definitely assist in consolidating and projecting Indian fashion to the world, besides helping brands with marketing, retailing and identifying suitable real estate to increase scale, pare costs, improve operating efficiency and boost profits.