The euro zone sovereign debt crisis has thrown up a plethora of opportunities for Indian luxury sector to foray into an otherwise difficult territory with mass appealing and unique ornaments.
Indian manufacturers of luxury items, including diamond jewellery, watches, leather goods and optical lenses, are increasingly looking for small-ticket acquisitions in Europe.
“We have slightly digressed from European to Asian and Southeast Asian markets and looking for acquisition of manufacturing units and retail chains that can add value to our existing business. But we have not completely taken Europe out, which means if we get anything really cheap supporting our current business, we would acquire it,” said Mehul Choksi, chairman of Gitanjali Gems, India’s largest branded jewellery manufacturer and retailer.
Gitanjali Gems recently acquired the remaining 10 per cent stake in Giantti Italia SRL from Ambio SRL, thus making the Italian jewellery company a fully owned subsidiary. In April, it had announced the acquisition of a majority stake in the Italian company for $15 million. The announcement came in 10 days of acquiring another Italy-based jewellery firm, DIT Group SpA. Besides designing and branding expertise, the acquisitions would help Gitanjali Gems grow its overseas business in new markets like Russia.
“We are looking for an acquisition in Europe, mainly in Italy, the UK and Switzerland, to avail the future growth opportunity. Since the aggravating euro zone debt crisis has undermined the business sentiment in the region, we look at this as an opportunity to acquire a retail chain of 15-20 shops. We are aiming to strike a deal soon,” said a jewellery manufacturer, a supplier to the target company in Europe.
According to Filip Van Laere, the Gems and Jewellery Export Promotion Council’s coordinator for Europe, “The per capita income in Europe stands at $40,000, the highest in the world. Therefore, people have enough investible income. Hence, acquisitions could be an option for future growth.”
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On Wednesday, India’s largest watch maker and retailer, Titan Industries, announced the acquisition of defunct Swiss luxury watch brand Favre Leuba for $2.7 million. It signed a binding offer with Spain’s Valfamily S L and Switzerland’s Maison Favre Leuba for this.
“We wanted something above Xylys and we got it. The manufacturing unit of Favre Leuba has been closed for four-five years. We would revive it to reintroduce this Swiss heritage brand globally, along with India. Swiss regulations allow us to manufacture certain things in that country, while other parts would be manufactured in India. Our priority is to make this brand a success before moving ahead,” said Bhaskar Bhat, managing director of Titan Industries.
Jewellery retailers from Europe who participated in the third India-Euro Jewellery Summit between 15th-18th of this month, said India-made ornaments had very few takers. Indian retailers acquiring some retail chains and manufacturing units in Europe can help change the impression towards the Indian jewellery industry. European buyers generally avoid purchases if they come to know a segment of ornament is procured from India, according to a participant.
However, Sanjay Kothari, vice-chairman of GJEPC, feels acquisition may be one of the options to explore business potential in Europe.