Home >Companies >News >Lacoste India licencee said to be in talks to sell permit

New Delhi/Bengaluru: The Lacoste India licence is up for sale as existing licence holder Amit Judge looks to end the 23-year-old partnership with the French clothing and accessories brand, according to two people aware of the development.

Judge, together with the global executives of the brand, is in talks with at least two retailers, including Arvind Ltd’s retail arm and Raymond Ltd, said the two people requesting anonymity.

The value of the licence is pegged at about 150-180 crore.

“There is a disconnect on the valuation and both Arvind and Raymond have shown little interest at this price," said one of the two people mentioned above.

In 1993, Judge, of Kolkata-based Turner Morrison Ltd, got the licence to manufacture and market Lacoste apparel in India. Judge is also the man who brought coffee chain Barista to India.

A licensing agreement typically involves rights to manufacture and design products locally, while franchising entails only rights to sell the product. Licensing deals typically give the owner of the local unit more control. In exchange, parent companies are paid royalty, which could range from 6-10% of wholesale value.

According to documents filed by Sports and Leisure Apparel Ltd, the licensee company for Lacoste in India, it is responsible for the manufacture of garments and trading of apparel, leather products, and accessories such as perfumes, wallets, belts, bags, footwear, eyewear and wristwatches.

Prior to opening up of foreign investment in single-brand retail, global brands relied on joint ventures, licensing or franchising to enter the market and scale business. In such cases, the parent company does not have ownership through foreign direct investment in the market.

Sports and Leisure Apparel currently has one facility in Noida, near Delhi, where it manufactures apparel, footwear, etc. About 90% of Lacoste products sold in India are manufactured locally. Last year, the company nearly doubled its manufacturing capacity to keep pace with demand.

The deal in all probability will entail transfer of the Noida unit. However, no change in the current management is anticipated.

While Judge holds the perpetual licence for manufacturing and marketing Lacoste products in India, the company is run by a professional team and steered by Rajesh Jain, managing director and chief executive officer of Sports and Leisure Apparel. The company is promoted by Judge, who is also the chairman with a 9.27% shareholding, documents filed with the Registar of Companies show.

Among the other shareholders, Bodhi Art Ltd, a firm owned by Judge, holds a 21.4% stake in the firm. Mint could not ascertain Judge’s total shareholding in Sports and Leisure Apparel.

Jain and Judge did not revert to Mint’s email queries.

Arvind declined to comment.

An email sent to Raymond on Thursday did not elicit a response.

Lacoste currently has 50 outlets in the country and is expected to double its store count over the next five years, Mint reported in October.

The company is also in talks to launch its online commerce platform.

Besides apparel, Lacoste sells shoes, bags, belts, sunglasses and watches for men, women and children. While apparel constitutes 89% of sales, footwear accounts for 8%.

Sports and Leisure Apparel posted a profit after tax of 1.5 crore on sales of 95.5 crore for the year ended March 2015.

Men’s casualwear market in India was pegged at 41,500 crore in 2014 and is expected to grow to 68,450 crore by 2019.

Women’s casualwear market, on the other hand, was at 4,350 crore in 2014, with expectations of it touching 8,894 crore by 2019, according to a report by retail consulting firm Technopak.

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