Ralph Lauren.docx

JOINT VENTURES AND AQCUISITIONS

Study of Joint Venture Between ADITYA BIRLA GROUP AND RALPH LAUREN

Submitted to Dr. Mangesh Jadhav Phalguni Sood BFT/15/334 BFT IV

Contents

      

Executive Summary About Ralph Lauren About Aditya Birla Fashion and Retail About the Joint Venture Advantages of the Joint Venture Conclusion References

Executive Summary A joint venture is a business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task. This task can be a new project or any other business activity. In a joint venture (JV), each of the participants is responsible for profits, losses and costs associated with it. However, the venture is its own entity, separate and apart from the participants' other business interests. India’s apparel and organized retail industry is at a nascent stage with per capita consumption and penetration at extremely low levels, entailing humungous opportunities for growth. The country’s demographics—world’s youngest nation with ~50% population below 25 years—is an added advantage for the organized retail and apparel sector. Other growth drivers include rising urbanization and expanding overall job market. Rising disposable incomes: Discretionary spending has high correlation with disposable incomes. Disposable income is a function of economic growth, a lynchpin for new jobs creation. Recovery in discretionary spending will help revive growth of India’s organized retail market. The country’s per capita income has also been rising steadily (up 37.6% over FY12-15), which will ultimately lead to higher discretionary spending. This is expected to further rise once GDP recovery kicks in.

About RALPH LAUREN Ralph Lauren Corporation is an American corporation. They are known for the clothing, marketing and distribution of products in four categories: apparel, home, accessories, and fragrances. The Company's brands include Polo Ralph Lauren, Ralph Lauren Collection, Lauren Ralph Lauren, Double RL, Ralph Lauren Childrenswear, Denim & Supply Ralph Lauren, Chaps, and Club Monaco. Ralph Lauren Corporation is an American, publicly traded holding company headquartered in New York City, and founded in 1967 by American fashion designer Ralph Lauren.

Revenue of Polo Ralph Lauren worldwide from 2002 to 2017 (in billion U.S. dollars)

About ADITYA BIRLA FASHION and RETAIL Madura is a leader in men’s wear with marquee brands like Louis Philippe, Van Heusen, Allen Solly and Peter England, in its kitty, each with MRP sale of >INR10bn p.a. The company is eyeing entry in adjacent high growth segments such as inner wear, women’s casual & formal wear as well as kid’s wear. Each segment entails potential to grow at a faster clip than men’s formal segment—Madura’s forte. Despite over >2,000 stores across various formats, Madura’s presence is still low in East and West India as well as Tier III and IV areas. These poorly tapped geographies will be the next growth avenue and it is estimated to add 100 stores p.a. till FY19.

Madura—Market size of brands vis-à-vis competition

Sales turnover of top brands—Madura’s brands outpacing competitors…

About the JOINT VENTURE Purpose of the venture: Madura Fashion and Lifestyle is keen on bringing in more premium brands as part of its strategy to retail high margin products. Madura portfolio ranges from the affordable to the high end brands like Ralph Lauren. The partnership will give exclusive rights to ABFRL to open and operate retail store under the Ralph Lauren brand name across the country. The company is also expected to get into a separate agreement to sell the products on its e-commerce portal the collective.in. ABFRL will be launching the retail stores for the brand in India thus strengthening the position of RLAPL in the country. Share Distribution of the venture: American fashion major Ralph Lauren is in talks with the Aditya Birla group’s Madura Fashion and Lifestyle for a 51:49 per cent joint venture, according to sources in the know of the development. Time Period of the venture: The sources indicated that the two companies may sign a 10-year deal. Both the companies are likely to tie up as a supplier to Ralph Lauren.

Advantages of the Joint Venture  RALPH LAUREN The exclusive partnership with ABFRL will help Ralph Lauren fight the counterfeit goods menace in India as currently there are many counterfeit products sold in the country mostly under its Polo brand. The US brand has filed as many as 60 cases in various courts over the years against companies and individuals that manufactured or sold counterfeit Polo Ralph Lauren products in India. Ralph

Lauren products are currently available online in India on leading ecommerce sites like Amazon, Myntra & Jabong.  ADITYA BIRLA GROUP Aditya Birla Fashion owns the exclusive rights for international brands Forever 21, Ted Baker, Simon Carter among many others and is also in talks for acquiring rights for American Eagle. Currently, ABFRL has over 8,000 points of sale across India, which includes more than 2,000 exclusive ABFRL brand outlets in India and abroad. Entering into a joint venture with Ralph Lauren would help the company to strengthen its portfolio.

CONCLUSION Ralph Lauren and Aditya Birla group can both be benefitted with this joint venture as it is a great opportunity for both the coventures. For Ralph Lauren, It will help in business development in a great retail market like India having the trusted suppliers (Madura clothings) and prevention of counterfeit goods menace. For Aditya Birla Group this can be seen as an opportunity to grow as a brand as they can strengthen their portfolio by increasing the number of brands under their retail outlet. The venture is for opening new stores in India thus ABFRL will be launching new stores for Ralph Lauren thus investing their capital and the profit will be divided in the ratio of 51:49%.Thus in this case, Ralph Lauren is depending on ABFRL for their advertisement and Manufacturing (Madura Clothing).

REFERENCES     

http://in.fashionnetwork.com/news/ABFRL-enters-into-license-agreement-with-RalphLauren-to-open-stores-in-India,941939.html#.Wo3y66iWZPZ https://www.projectstoday.com/News/Aditya-Birla-group-company-likely-to-tie-upwith-Ralph-Lauren https://www.thehindubusinessline.com/companies/Aditya-Birla-group-company-intalks-with-Ralph-Lauren-for-joint-venture/article20753665.ece?utm_reader=feedly http://www.ventureintelligence.com/ddw/ddw-18-04-2014.htm https://www.thehindubusinessline.com/companies/Aditya-Birla-group-company-intalks-with-Ralph-Lauren-for-joint-venture/article20753665.ece