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Business – Provogue talks to FMCG firms for distribution joint ventureq

Upasana Kaur & Raghavendra Kamath

Apparel maker and retailer Provogue India is in talks with fast moving consumer goods companies (FMCG) to form a joint venture to distribute its bodycare products across the country, a top company official said

Though the official refused to name the companies it is talking to, FMCG companies such as Godrej, Hindustan Unilver and Marico can fit the bill, as they already have presence in bodycare and large distribution capacities in the country, analysts said.

Separately, sources said Kishore Biyani’s Future Logistics is also planning a foray into the distribution business, for which it is talking to a few companies.

Currently, Provogue sells hair gel, body spray and other accessories under its own brand name in its stores and select outlets of Shoppers Stop’s department stores. The distribution JV is expected to help it gain better market share and expected to give Rs 50 crore in revenues in the next couple of years, the official said.

“We have capabilities in the bodycare segment and we want to expand this area through a joint venture with distribution companies,’’ said Salil Chaturvedi, deputy managing director, Provogue India.

The company sells apparel, footwear, accessories and sunglasses in its stores and outsources manufacturing of bodycare products to vendors. It has a licensing agreement with M&B Footwear, where it is doing a business of Rs 45-50 crore, he said.

Provogue finished last year with revenues of Rs 350 crore and is aiming a topline growth of 20-25 per cent every year. The company is planning to add 50 more stores to take the tally to 175 in the next two years.

West Asia foray
The company is planning to float a separate company in West Asia and is in talks with companies in the region to start retailing operations there, disclosed Chaturvedi. The company expects to sign a JV by the middle of next year and open stores by financial year 2011, he said.

The company has mandated a banker to find a partner in West Asia. “West Asia will be the stepping stone for our foray into global markets. It makes more sense, as rentals have cooled down there. But, we have to be more careful, as we have to compete with international brands and offer acceptable products,’’ Chaturvedi said.

Provogue also held talks with international retailers to set up a JV in India, but they did not go ahead with the plan as rentals were high, making the business unviable. “We can focus on our expansion (now) as rents have come down and the back-end is in place,’’ he said.

Promart plans
Provogue is also planning to rebrand its discount format, Promart, into a value brand and a more youth-oriented concept. The company is planning to sell more full price products of its vendors at Promart stores than discounted products, as the former is fetching more revenue and margins, Chaturvedi said.

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September 26, 2009 - Posted by | Uncategorized |

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