PE firm Kedaara Capital acquires 10% in ethnic brand Manyavar's owner

MUMBAI: Private equity firm Kedaara Capital has acquired about 10% stake in Vedant Fashion, which owns ethnic brand Manyavar, for Rs 400-450 crore.

The valuation of Vedant at Rs 4,000-4,500 crore is almost at par with that of Fabindia when it sold a stake to Infosys co-founder Nandan Nilekani last year, and higher than the market capitalisation of department chain Shoppers Stop.

The Kolkata-based company posted a net profit of Rs 90 crore in fiscal 2015-16, the highest within the country’s apparel sector, on sales of Rs 504 crore. “We have given a minority stake to Kedaara Capital and are extremely happy to have them on board,” founder Ravi Modi said. He declined to comment on the deal contours. Kedaara Capital founder Manish Kejriwal was unavailable for comment.


L Catterton, the merged entity of LVMH-sponsored fund L Capital Asia and PE firm Catterton, was also in the race to acquire a minority stake in the company. Manyavar opened its first door in 1999 in Kolkata but didn’t expand at all during the following decade. The retailer has then been aggressive in the past five years and has more than 400 stores now. It has a stated policy of not selling even a single piece of garment on discount.

The company attributes its increasing sales and profit to a host of factors, from cost efficiency to strict pricing policy. Manyavar either donates or destroys unsold stock, adding pressure on the company to keep designs relevant and sell products aggressively.

In comparison, most apparel brands have been offering steep discounts to move unsold merchandise, resulting in the erosion of retailers’ margins and more than a fifth of sales taking place during end-of-season sales.

Right from local boutiques to established traditional retailers and regional brands, every ethnic wear retailer is vying for a share of consumer wallet in a market that is governed more by design than brand.

Indian wear, initially largely restricted to the older age segment, now finds acceptance among younger consumers as well, and Manyavar too now sells fusion clothing — a mix of modern and traditional wear —instead of just ethnic which are reserved for special occasions.

It is also trying to push its wares as an everyday wear brand instead of just for weddings and social functions. A few months ago, it roped in cricketer Virat Kohli as a brand ambassador. Ethnic wear, still mostly fed by the unorganised segment, has demonstrated steady growth over the past few years.

In fact, leading department chain formats such as Shoppers Stop, Lifestyle and Westside are increasing the width of the private label offering and are providing contemporary styling in the ethnic space, fuelling growth.

The company is seeing potential in women ethnic wear and opened a subset, Mohey. “The company has recently acquired an ethnic brand Mebak and is also in talks to acquire women apparel brand Soch, another designer label and an online brand,” said a person privy to the matter.

Makers of ethnic brands in the country — TCNS Clothing (W and Aurelia), BIBA, House of Anita Dongre ( AND, Global Desi) and Ritu Kumar — all posted 14%-64% year-on-year jump in their revenue last fiscal, even as the overall Indian apparel market slipped to a single-digit growth at 8%. Private equity firms have been quite upbeat on the branded ethnic apparel segment.