NEW DELHI: Ritesh Kumar, director at DS Group, dons two contrasting avatars as a businessman: as the India representative of American luxury fashion label Tom Ford, he spends time rubbing shoulders with the society's crème de la crème, talking luxury and understanding their preferences; at other times he's busy running operations and making plans for the group's popular pan masala brand Rajnigandha.
Kumar, 33, says it's pure "passion for the brand" that drove him to get the rights to retail Tom Ford in India about five years ago — in complete contrast to the group's other business interests that include bottled water, soda and masala under the brand Catch.
But he's not an exception. A plethora of cash rich businessmen running myriad businesses ranging from mining and power generation to real estate and gutkas have taken a plunge into the world of luxury.
In fact, more than half a dozen luxury fashion labels including Tom Ford, Versace, Roberto Cavalli, Armani Junior and Corneliani in India have partnered with local entrepreneurs with no prior association or connection with luxury brands.
For example, Italian menswear brand Corneliani is backed in India by Orissa-based OSL Group that's engaged in activities like mining, cargo and logistics. And Infinite Luxury — which retails brands like Versace, Roberto Cavalli, Emilio Pucci and Missoni in the country and has fashion designer Manav Gangwani as its face — has funding from the Chaurasia Group that sells gutkas and pan masalas.
"Diversifying the portfolio helps in reducing business risk and safeguard the investment to a certain extent. Luxury business is just not passion, but a serious attempt to be a significant player in booming market by adding more brands to the portfolio," said Prem Dewan, retail head of Corneliani in India.
Most of the new luxury investors run cash rich companies. According to some observers, in luxury they see a platform that's good investment and also helps burnish the social equity of the families.
Interestingly, most entrepreneurs prefer to stay behind the scenes and maintain a low profile while letting professionals with luxury background to run the show, or, in some cases, let the younger generation of the family look after the luxury business.
And almost all of them say luxury is serious business for them.
Pratik Dalmia, whose family firm Dalmia Polypro is into plastic recycling, said he decided to get Italian menswear brand Kiton and shoe label John Lobb into India last year looking at immense opportunity in the luxury sector. "The venture is entirely funded by family funds," said Dalmia. "The idea of dabbling in an entrepreneurial initiative excited me and it is not just a trophy business."
Swati Saraf, 30, a businesswoman married into a family that's into power generation, runs Les Petit store that sells expensive kids wear from brands such as Dior, Armani and Fendi. "Indians were still not very open to spending too much money on kids wear, but the segment has tremendous potential. I invested a lot of time to understand how luxury functions and to understand the demand supply dynamics," she said.
And the first timers are slowly getting a grip on the vagaries of the luxury market.
Unique Eye Luxury Apparels, set up by real estate and consulting businessman Gagan Dhawan, that runs Armani Junior stores in the country is tweaking its business model. "We have undergone some kind of correction in our revenue model and hope that the business will break even in the next two seasons," said Sudeep Chhabra, business head of the company.
Most these luxury businesses don't yet add much to the top lines of the family businesses of their promoters.
"One store has broken even but for expansion, funds will come from the family business only," said Ritesh Kumar of Tom Ford. "But I am accountable for every single penny invested and it has to be a profitable venture," the DS Group scion said.
Experts, however, warn that managing a luxury brand cannot be a side business, but it's a tedious, detail oriented, time consuming task.
"The required 'zero tolerance approach' that a brand SOP demands does not always match the easygoing mentality of a non-professional glamour struck local partner," said Abhay Gupta, a luxury consultant.
None of those ET spoke to for the story was willing to share the sales figures of their respective brands in India or the amount of funding coming from the investors.