Baby products retailer Prowl Germany to invest Rs.600 cr in India

Source: live mint & the wall street journal by Sapna Agarwal

Mumbai: Prowl Germany UG, a multi-brand retailer of baby products, plans to invest Rs.600 crore in India in the next 4-5 years to set up a manufacturing plant and a chain of stores, said a senior company executive.

The company formed a distribution partnership in January with Kochi-based Zaal Commercial Pvt. Ltd for its 101-year-old feeding accessories brand called Nip, and is preparing to file an application for foreign direct investment (FDI) in multi-brand retail, managing director Rajesh Padmanabhan said in an interview.

The company plans to expand in three phases. “The first phase is distribution. We will set up an original equipment manufacturing (OEM) in the second phase and our own multi-brand retail stores in the third,” he said, adding that since the FDI clearance could take time, “we will import and sell through distributors till then”.

In September, the government eased norms to allow 100% FDI in single-brand retail and 51% FDI in multi-brand retail. Multi-brand retail stores will need the approval of governments in the states where they want to open stores. Ten states, including Maharashtra, Delhi and Haryana, have decided to allow overseas retailers to open multi-brand stores.

Prowl Germany represents four brands—Nip, wooden toys brand Hess-Spielzeug, portable baby beds brand Deryan and Spiegelburg International’s concept- and character-based products range.

The company has launched Nip in the four states of south India—Andhra Pradesh, Karnataka, Tamil Nadu and Kerala. It is looking at appointing more distributors, launching more products and establishing an all-India distribution presence in the next six months, said Padmanabhan.

The baby and children’s care products market is estimated to be worth $11.8 billion and forecast to grow at a compounded annual growth rate of 17% to $26.2 billion by 2017, according to an April report by RNCOS E-Services Pvt. Ltd, a research company.

The high growth potential has attracted many new companies to the segment.

Earlier this month, Piramal Enterprises Ltd, known for its brands like Lacto Calamine, i-pill and Saridon, launched Jungle Magic’s Banditz—a mosquito repellent band for children—and Jungle Magic perfumes in animal shaped bottles. “We expect the range to have revenues of Rs.100 crore in the next 4-5 years,” said Swati Piramal, vice-chairperson, Piramal Enterprises Ltd, adding the children’s products segment is a big opportunity.

“A lot of international brands are interested in coming to India,” said Umang Agrawal, director, Abracadabra, a children’s linen and accessories brand which launched operations two years ago. Agrawal has also tied up with two American and Canadian brands as their India partner and is now expanding operations.

Despite high growth potential, the baby and children’s products market is a tough one to crack. Retailers such as Spykar Lifestyles Pvt. Ltd, Raymond Ltd and Koutons Retail India Ltd, which ventured into the segment in the past, have exited from the sector.