Denmark-based fashion house Bestseller A/S will invest $30 million (approximately Rs 180.83 crore) to directly run exclusive stores for two of its global brands 'Only' and 'Vero Moda' in India, a development which could mark its disassociation with local partner Prashant Agrawal, also a co-promoter of public-listed textiles firm Bombay Rayon Fashions.
Global clothing retailer Bestseller A/S presently sells products under three brands in India: menswear brand Jack & Jones; women’s brand Vero Moda and Only through franchisee partner, the local promoters of Bombay Rayon Fashion. It also has an accessories brand, Pieces, which is available within Vero Moda and Only stores.
Currently, Danish billionaire Anders Povlsen and family-owned Bestseller owns around 37.89 per cent equity holding in Bombay Rayon with the local promoters controlling 54.36 per cent.
It is not immediately clear if the existing franchisee agreement for the brands in India stands quashed or will be scrapped soon. Email queries sent to the spokesperson of Bombay Rayon Fashion for more clarity on the development did not immediately elicit a response.
Bestseller spokesperson replied: "The restructuring of our Indian business is still ongoing and as such, we cannot comment on any speculations. Once a final structure is in place, we will be able to provide more information."
Previous media reports had suggested that Bestseller is likely to break the franchisee agreement with the local partner and one report went on to say citing sources that Bestseller is looking at multi-brand retailing in the country.
Bestseller United Singapore Pte Ltd, an arm of Best Seller, had applied to the Foreign Investment Promotion Board (FIPB), the nodal body monitoring foreign investments in India, to invest Rs 180 crore to set up wholly owned arms to run Vero Moda and Only branded stores in the country.
It had also sought a nod to invest an additional Rs 30 crore ($5 million) to acquire 100 per cent stake of Best United India Comforts Private Ltd from existing shareholders and for setting up single brand retailing stores at the initial stages. FIPB has approved all the three proposals.
The previous government had increased the FDI ceiling in single brand retail to 100 per cent in January 2012 from 51 per cent earlier while allowing multi-brand retail to have up to 51 per cent foreign investment. While only Tesco has applied and got the green signal for multi-brand retailing in India, the relaxation in norms led many firms to line up for single brand retail in India.
Bestseller one of the world’s leading retail clothing companies that sells its products in Europe, the Middle East, Asia and Canada through over 5,700 chain stores. Pieces, Mamalicious, VILA, Selected Femme and Junarose are the other brands by the company, apart from Vero Moda and Only.
(Edited by Joby Puthuparampil Johnson)