What is your brand worth? (E)valuating fashion in India

13 May 2022 , 3:44pm

Anand & Anand senior partner Safir Anand explains how Indian fashion designers are building and securing their luxury brands

In the words of Coco Chanel, ‘the best things in life are free. The second best are very expensive’. Monetarily speaking, it is a recent affair in India for fashion designers to re-think what their labels may be worth even when their creations are brought at top-selling prices. The higher the price, the more it caters to the segment of luxury. Ironically, luxury labels tread a fine path between retaining exclusivity by limiting availability yet reaching out to the masses, increasing the desire for more and more supply. The graph between increased demand and reduced supply, likely makes the brand coveted. Or, up until now the luxury segment has been operating on this theory. Covid however may have overhauled everything we’ve known so far. Add to this the ever-present need to secure art-work and creation to avoid dilution and maintain exclusivity, fashion brands in India are increasingly focused on protecting their intellectual property. For Indian designer labels, they are watching as their brands grow in value and importance, which makes intellectual property protection that much more important.    

Evolution over the ages 

Although fashion has been ever-present in India, with roots going back to the Indus Valley civilization (3300 to 1300 BC), its evolution over time is testimony to the economic, cultural, political, and social growth of the country. Yet as glamourous as generally is, it has only risen in importance in India for about last two decades.  Recognition of intellectual property as key behind a brand’s success is also a recent development.  For example, there is no specific Indian legislation focused on the fashion industry. Instead, the Indian industry relies on the laws governing intellectual property. Even then, it is a recent proposition for fashion designers to consider protecting what they create in terms of seeking registrations through trademarks, copyright, designs or in some cases even patents, apart from how Indian brands protect their brand names. 

Historically, only the Indian production houses such as Satya Paul, Kimaya and Ravissant sought protection of their intellectual property. Gradually, designers such as Ritu Kumar, Manish Malhotra, Abu Jani Sandeep Khosla, Anju Modi started realising the importance and value of securing their rights. As awareness developed, fashion designers learned multiple ways of securing their IP beyond brand name protections and expanding to copyright and designs. Today, several fashion designers file for design applications of their novel creations and attempt to keep their rights strong for enforcement against look-alikes. But although transformation has started in India’s fashion sector, it has a long way to go. 

Tides are turning 

With liberalisation of the Indian economy two decades ago, the importance of brands and their value has gained interest, as has the need for IP protection. 

While everything has been more challenging in these last pandemic-fueled years, India’s fashion industry continues to redefine itself with progressive ways of expansion and adaptation.  With months-long lockdowns and restrictions on gatherings including weddings, the luxury segment of India’s fashion industry experienced many of the same problems as other global suppliers such as reduced demand, supply chain disruption, and even the rise of lounge wear as the new go-to. In response, several luxury brands in India have continued to away from their traditional operations through M&A activity, new partnerships and licensing deals.  

Mergers and acquisitions in the Indian fashion segment 

Earlier this year, Aditya Birla Fashion and Retail (ABFRL), a billion-dollar, pure-play fashion powerhouse with many leading fashion brands and retail formats --  including Louis Phillipe, Van Heusen, The Collective and Ted Baker --  announced its intent to buy a majority stake in House of Masaba Lifestyle, which was founded by Masaba Gupta. The acquisition is likely to involve an investment of about 90 crore ($12.14 million), which would provide funds for the designer brand to further expand and grow. Joint ventures between deep-pocket fashion powerhouses and designers are a lucrative business model and many collaborations are expected in this space. In the past year, ABFRL acquired a 51% stake in India’s luxury wedding wear brand Sabyasachi for 398 crores ($52 million) followed by a 33.5% stake in Tarun Tahiliani’s label for 67 crores ($8.8 million), paving the way for its global growth in the ethnic-wear segment. 

Reliance Brands Ltd., part of India's largest private sector company, Reliance Industries Limited, is India’s largest luxury player with partnerships with several international brands such as Bottega Veneta, Michael Kors, Jimmy Choo, Salvatore Ferragamo, Giorgio Armani, Burberry, Tiffany & Co. and many others. It also bought a majority stake in designer label Ritu Kumar, which introduced the concept of designer wear in India, calling it a ‘partnership rather an acquisition’.  Reliance also acquired minority rights in Manish Malhotra’s label, a renowned designer in Bollywood.  

Feather on the cap 

While partnerships with international brands has always been popular, the recent increase in collaborations with Indian designers is beginning not only highlights their work, but also increases their brand value. One of the key reasons for these high-stakes acquisitions is the brand value established over the years with ownership of strong intellectual property rights. With these collaborations, designers can use the funding to grow their market reach and increase turnovers exponentially. At the same time, the corporates having acquired stakes in these brands are operating with the intent of capitalising on the brand name and value, by introducing collections that may be of a more affordable category, reaching out to a wider segment of consumers. These collaborations may also open up the possibility of bringing Indian designer labels to the world market, pushing India forward on the global fashion ladder. This may be a pure win for all the players involved including consumers, as designer labels may see availability with redefined access to consumers who previously could not afford these brands. For example, Sabyasachi and fast-fashion giant H&M recently collaborated on a affordable clothing collection. Vital for luxury is also the essence of exclusivity which continues with Sabyasachi releasing his collection also in the higher price and quality segment. 

The tested path 

In addition to equity participation, fashion houses have always been keen on brand partnerships through various forms of collaboration including licensing. Licensing deals provide designers with steady income generation with regular royalties adding to the annual revenues used to scale up. For example, in 2010 Tarun Tahiliani was the first Indian designer to create a partnership with Timex for a collection of mono-branded, jewelled watches.  Another Indian designer Manish Arora, launched a range of Disney-inspired collections as did Satyapaul with its tie-up with Disney India. Without a doubt, licensing as a means of brand capitalisation is much sought after in every industry and fashion is no exception. In several countries across the globe, licensing of fashion labels contributes to increased brand value and the Indian fashion market has recently started its walk towards understanding, evaluating and increasing that value.  

Safir Anand is senior partner and department head (trademarks, contractual and commercial IP) at Anand & Anand, India’s full-service intellectual property law firm.  He can be reached at safir@anandandanand.com.