INDIA BUSINESS WORLD - AUGUST 2006
THE MONTH THAT WAS...

LOUIS VUITTON GETS FIPB NOD FOR INDIAN FORAY

LOUIS Vuitton Malletier (LVM) — the world's largest brand in fashion and leather goods — has got the green signal from foreign investment promotion board (FIPB) for acquiring 51% equity stake in LV Trading. This marks one of the first approvals for FDI in single branded retail in the country. The government had relaxed FDI norms in the retail sector by allowing joint ventures with retailing of a single brand early this year.

According to the plan, Louis Vuitton Malletier would acquire the majority stake in the company to form a JV by subscribing to 51% of the equity share capital and purchase of non-convertible preference shares. This would involve an investment of Rs 5.7 crore, of which LVM would put Rs 1.5 crore for picking the stake.

In addition, it would purchase 2.5 lakh zero coupon redeemable, non-convertible preference shares at a premium of Rs 2.87 crore. LVM is also subscribing to fresh zero coupon redeemable non-convertible preference shares in LV Trading with an investment of up to Rs 1.32 crore. Thereafter, LVM proposes to make additional investment of Rs 26.5 crore spread over five years for expansion.

LV Trading is a Mumbai-based entity with two retail stores located in Mumbai and Delhi . It has a non-exclusive distribution agreement with LVM to sell Louis Vuitton branded products in India .

Louis Vuitton Malletier, which is part of the world's largest luxury products group Louis Vuitton Moet Hennessey, would be retailing products like leather goods, shoes, watches, jewellery, textiles, writing instruments, luggage bags, sunglasses and accessories through the joint venture. These products are already being sold by LV Trading through its two stores.

Louis Vuitton Moet Hennessey has an existing presence in the country through a clutch of luxury brands, including Tag Heuer and Christian Dior. These brands would, however, continue to be sold separately.