Canali buys 51% stake in Genesis JV

NEW DELHI: Italian luxury brand Canali has picked up 51% stake to form a joint venture with its Indian franchise, Genesis Luxury Fashion, two persons familiar with the matter said.

Though Canali had the option to set up a wholly-owned subsidiary, following the government's decision last month to allow 100% foreign direct investment in single-brand retail, it has opted to stick to the previous ceiling.

A higher shareholding would have required it to mandatorily source 30% of its products from Indian small and medium enterprises, the persons quoted earlier explained.

Small and medium enterprises are defined as companies that have a total investment in plant and machinery not exceeding $1 million.

A Genesis Luxury Fashion spokesperson declined to comment on the JV plan, which is awaiting the government's clearance.

Canali is the first luxury brand to invest in India since the government removed the cap for foreign companies. Genesis, a franchise for several global luxury brands, has been operating five Canali stores in India - two in the National Capital Region, at the DLF Emporio Mall and at the Oberoi hotel in Gurgaon, and one each in Mumbai's Palladium mall, Hyderabad's Taj Krishna hotel and Bangalore's UB City mall.

"Canali is bullish about India and it might also venture into some of the smaller cities if good retail infrastructure comes up there," an industry expert, who works with various global luxury brands, said on condition of anonymity.

Global brands are increasingly eyeing India where the luxury market is growing at 20% a year and is expected to expand to $14.7 billion by 2015, from $5.8 billion, according to a recent report by CII and AT Kearney.

India has three million affluent households, defined as those with more than $100,000 (about Rs 50 lakh) of investable surplus, a global affluence study by research firm TNS said. The number of high net worth individuals, who have assets of $1 million or more, will more than double to 403,000 by 2015, Swiss wealth manager Julius Baer recently forecast.