Pepe Jeans inks JV with Dollar Inds to enter innerwear business in India

KOLKATA: Denimwear giant Pepe Jeans Europe BV is entering into the premium innerwear market in India through a 50:50 joint venture — named Pepe Jeans Innerfashion Pvt Ltd — with Kolkata-based hosiery major Dollar Industries.
The maker of Pepe Jeans London, the No. 2 in the Indian denim market, will bring in its European innerwear productline and design and leverage the Dollar Industries’ extensive distribution and production network to manufacture and market premium range fashion innerwear, loungewear, gymwear, sleepwear and track suits for adults and kids in India, Sri Lanka, Nepal, Bhutan and Bangladesh.The JV will use only Pepe brand name for its entire product line and branding. The premium innerware of Dollar would continue to be offered under the Dollar brand.
The Pepe-Dollar innerware JV will attract Rs 36 crore FDI from Pepe Jeans Europe BV as FDI while the company will have a total equity of Rs 72 crore, said Dollar Industries MD Vinod Gupta said. The entire investment will be to the tune of Rs 200 crore which will be spent on raw materials and branding in four-five years. “We are hoping to attain a topline of Rs 600 crore in its ninth or 10th year,” added Gupta. However, the JV doesn’t have an immediate plan to set up a new plant.
On May 30 this year, TOI was first to write that Dollar Industries was looking to go for a licencing arrangement with one of the iconic innerwear brands in the US or Europe in a couple of months.
On why a globally renowned brand like Pepe is associating with an Indian knitwear company, Kavindra Mishra, MD, Pepe Jeans India, said: “Premium innerwear is a strong and profitable domain with a 20% margin as against 9-10% in the general knitwear segments. However, the premium innerwear segment has got its own distribution and production challenges. ”
Dollar Industries sells its current product range through over one lakh touch points while Pepe Jeans mostly retails from 216 exclusive franchise stores, 364 large format stores and 1,100 multi-brand stores across 125 cities in India.
Dollar Industries, which has around 15% market share in the branded hosiery market, has registered a turnover of Rs 906 crore for 2016-17 against Rs 830 crore during the previous fiscal. “We recorded a revenue growth of 9.15%. We have also achieved a total of 9% exports. Our goal is to achieve Rs 2,000 crore turnover by 2024,” said Gupta. Pepe Jeans India last fiscal recorded turnover was Rs 424 crore (in wholesale price). Retail value of Pepe Jeans India is pegged at Rs 800 crore.
Premium innerwear segment covers 25% of Rs 8,000-crore innerwear market in India.