Liberty may form new company for global foray

Liberty Shoes, the second largest footwear company in the country after Bata, is considering to set up a separate company to market an international range of footwear and leather apparels.

In October 2006, Liberty Shoes had entered into an MoU with the Hong Kong-based Egana Goldpfeil to market its fashion accessories in the country. Egana Goldpfeil has about 50 luxury brands, including footwear and leather apparels.

The company is conducting a feasibility study to chart the way forward. Adarsh Gupta, executive director, Liberty Shoes, said, "The company is undertaking a feasibility report to ascertain if the brands should be introduced through a separate company or under one of the existing retail formats." He added the company would arrive at a decision in three months.

Egana Goldpfeil is a multi-branded fashion accessories company with a turnover of more than $500 million (about Rs 2,200 crore) and a presence in 90 countries. Through the JV, Liberty plans to launch luxury footwear, leather apparel and accessory brands in India. The company also plans to widen its retail presence through subsidiary, Liberty Retail Revolutions, and Footmart, a joint venture with Pantaloon Retail.

Footmart would be launching its first footwear lifestyle retail store Pairs in April in Bangalore. A retail format of more than 5,000 sq ft, Pairs would open 30 stores this year and 85 in four years under two formats "" Shoe Factory and Pairs.

Apart from retail ventures, Liberty is also bullish on its original equipment manufacturing business for Reebok, Nike and retail chains like Wal-Mart. Commenting on the company's possible partnership with Wal-Mart for the Indian market, Gupta said, "In principle, we have agreed to manufacture for Wal-Mart. As far as manufacturing capacities are concerned, the company is in the position to cater to the needs of either Wal-Mart or Reliance."

Liberty Shoes is also in the process of raising Rs 125 crore through Qualified Institutional Placement and private placements to fund its expansion plans. The company would be utilising about Rs 50 crore for upgrading manufacturing capacities, while Rs 25 crore has alloted for retail expansion. "In four years, we intend to double our turnover to Rs 400 crore. The Footmart venture is also expected to touch Rs 400 crore with Liberty having 25 per cent share," Gupta said.

According to analysts, "The recent excise duty cut in footwear will benefit the company in expanding margins, but this could be offset by the service tax proposals for renting commercial properties." According to a PriceWaterhouseCooper's report, the highest penetration of organised retailing is in footwear (22 per cent) followed by clothing or apparel (12 per cent).