French luxury brands target India's super rich

India may not be seen as the easiest place to sell a US$1,000 handbag, but top luxury brands from France say the country holds the key to a major boost in global sales.

The per capita income in India hovers just above US$700, according to the World Bank, but with a one-billion-plus economy, increasing numbers of people are crossing into the category of super rich.

India now has the highest number of billionaires in Asia, according to Forbes magazine. About 1.6 million households earn more than US$100,000 a year, making them all potential customers of luxury goods.

'Right now the numbers are very marginal. But India is one of the markets where growth will be exponential,' Damien Vernet, general manager for Louis Vuitton in the Middle East and India, told AFP. 'We're very happy with our numbers in Europe but the future is in places like India, the Middle East, China and Eastern Europe.'

Mr Vernet, as well as other top officials of French brands represented on the Comite Colbert, an association of some 70 luxury houses, was in India ahead of a two-day luxury goods conference that began yesterday.

The Indian luxury market is thought to be worth some US$2 billion and is growing at some 20 per cent a year, according to figures from the Federation of Indian Chambers of Commerce and Industry.

According to retail consultancy Technopak, which last year surveyed some 4,000 affluent consumers across the country, the market could potentially be worth up to US$14 billion a year. It said there were 1.6 million families which could spend up to US$9,000 on items like fashion ware and jewellery.

Xavier Bertrand, managing director for Chanel in India, said the company had recorded sales growth of 'between 40 and 50 percent' last year, and will next week open its fifth Indian store in the southern high-tech hub of Bangalore.

'What makes India unique is a young population that also aspires more and more to luxury products,' Mr Bertrand said.

Part of the change is cultural, with many of the young, who have come of age during the economic liberalisation of the 1990s, eschewing the independence struggle-inspired 'buy Indian' ethos of their parents and grandparents.

'I would like to call it traditional modernism,' said Shimul Mehta Vyas, head of India's top fashion school, the National Institute of Design, at a pre-conference event. 'On the one hand we still uphold our traditional culture but on the other hand we aspire to be global consumers.'

But the retailers said it is sometimes difficult to find the right location for their stores. Currently many companies sell in five-star hotels, with some venturing out to top malls, but stay away from the 'high street', with most markets even in urban India a chaotic scene of crowded small shops on potholed roads.

'There is a lack of selective retail environments,' said Mr Vernet, whose company has two shops in India, both in top hotels.

But unlike lower-end global American brands such as McDonald's - which in India serves spicy concoctions of mashed potato and cottage cheese for the largely vegetarian population - the French say they will not 'Indianise'.

'What we propose is Chanel style, whether you like it or not. If you don't like it, don't buy it,' Chanel chairman Francoise Montenay said. - AFP     31 March 2007

Non-resident Indians worth over US$1 trillion

2007 May 11:  The 20 million Indians living abroad have accumulated wealth of more than US$1 trillion, a figure noticeably higher than the country's GDP of about US$850 billion, a government committee has estimated.

The US$1 trillion figure for the wealth of these expatriates, known as non-resident Indians or NRIs, includes real estate, gold and art valued at over US$500 billion. The figures are the work of a committee appointed by the federal government to find ways to make Mumbai an international financial centre.

The committee reported: 'These NRIs were a natural beachhead as a customer base wherean Indian personal wealth management industry can get started. Their wealth management services were presently being sourced almost exclusively from abroad.'India's remittances from abroad of US$25 billion a year are the highest for any country in the world, and they are increasing at 25 per cent a year. Much of the money comes from Indians living in the Gulf region.

Indian Prime Minister Manmohan Singh has described Indians abroad as the backbone of the country's economy, saying that 'their welfare is in the country's interest'.

The World Bank's Global Economic Prospects for 2006 reported that India for the first time overtook China as the nation whose overseas workforce remits the most money.

The World Bank says that officially recorded remittances worldwide exceeded US$232 billion in 2005, with India receiving almost 10 per cent of the amount (US$21.7 billion). China came second with US$21.3 billion, followed by Mexico, France and the Philippines.

The World Bank says remittances sent through informal channels (such as the hawala in India) could add at least 50 per cent to the official estimate, making remittances the largest source of external capital in many developing countries.

A JP Morgan report has said that the Indian Diaspora can be a 'powerful catalyst,' in helping India realise its aspiration of 10 per cent annual growth in GDP.

It is one of the main reasons the government is keen to recognise and address theinterests of the growing diaspora, including granting of dual citizenship, conducting the annual Pravasi Bharatiya Diwas (festival for Indians abroad) and easing norms for investments in property as well as flow of funds.

NRI steel tycoon Lakshmi Mittal has earned a staggering 4.1 billion (S$12.4 billion) during the past year to add to his wealth of 19 billion, easily retaining his position as the richest person in Britain.  

Knight Frank, one of Britain's biggest estate agents, released a report recently called Brics & Mortar: International Project Marketing 2007, which said Indians are keen on prestige addresses in central London such as Grosvenor Square, Kensington Palace Gardens and Park Lane. The report added that mid-priced properties, between 400,000 and 700,000, are most popular. (The word Bric, is the acronym used for the emerging economies of Brazil, Russia, India and China.)

The US Census indicates that Indian Americans (numbering close to two million) have moved ahead as the most vibrant Asian minority in the US, garnering highest levels of income, education and job status.

Indian men had the highest year round full-time median earnings (US$51,900), more thanthe Japanese and well ahead of the national average (US$37,057) and the Asian average (US$40,650). Indian women were only slightly behind Japanese women in median earnings (US$35,998 versus US$35,173).

About 64 per cent of Indians in the US have at least a Bachelor's degree, compared with 44 per cent for all Asians in the US, and just 24 per cent for the population as a whole. - SINGAPORE BUSINESS TIMES            11 May 2007

India's wealthy seen buying more property

(MUMBAI) India's growing class of rich individuals will invest more in real estate as demand for offices, malls, residences booms in Asia's fourth-largest economy, a DSP Merrill Lynch official said on Monday.

'India's wealthy have been predominantly investing in equities, but the other category where they are looking at investing a lot is real estate,' said Pradeep Dokania, managing director for global private client, DSP Merrill Lynch - the Indian unit of Merrill Lynch.

There will not be an immediate sharp shift in investment patterns, but over the next couple of years, proportionally more money would be ploughed into real estate, he said.

India's US$40-45 billion property market is poised to grow 20 per cent over the next five years, forecasts Swiss banking giant UBS.

Real estate prices have more than doubled in Mumbai, New Delhi, Bangalore and Hyderabad in the last three years as the country builds more to feed the growing middle class.

But there is still scope for growth in real estate given the minor portion of real estate assets in individual portfolios, he said.

According to a study by Merrill-Capgemini, real estate consists of just 16 per cent of the assets of the wealthy in India, compared to 31 per cent investment in stocks, he said.

'That (real estate) is starting to develop,' he said. 'There is GDP growth, there is foreign direct investment and all that has to reflect in real estate growth,' he added.

'Real estate allocation can grow up to 20 per cent or so, may be diverted from cash and equity, but I don't expect it to go to 30 per cent or 50 per cent,' said Mr Dokania, a former Merrill Lynch investment banker.

Foreign property investors including Citigroup, Morgan Stanley and US pension fund Calpers are investing in Indian property and dozens of developers plan to raise funds in IPOs.

But he said equities will remain in favour for some time given the historical reliance of Indian wealthy on shares in the absence of alternatives.  - Reuters   11 Nov 2006

India's rich: The flashy cars of a maharajah for modern times

Just as most people don't waste their time counting up trifling possessions like, say, underwear or socks, Poonawalla has no interest in taking stock of his car collection. He has a large number of them but certainly not yet enough.

"I've lost count. Anyway, I know I've got eight Rolls Royces," he concludes, casually gesturing somewhere beyond the verandah of his mansion, past the three cages of brightly-plumed parrots, (imported from Latin America), past the lemon yellow Lamborghini, past the waiting line of uniformed chauffeurs, to a cluster of shining vehicles.

Since he took possession of the first new Rolls Royce to be sold in India in five decades, Poonawalla has become a poster boy for a new era of conspicuous consumption here. Featured on the front of society magazines dangling the keys to his new $940,000 Phantom from fingers heavy with diamond-encrusted jewelry, his style is that of a modern maharajah, a man with no reserve about flaunting his money.

A multimillionaire through his family business - which encompasses pharmaceuticals, hotels and horse breeding - he devotes both his cash and his spare time to nurturing a lifelong obsession with expensive cars.

Fifteen years ago, India's closed economy made it impossible to bring cars into the country, and the austere tastes of a socialist-leaning nation meant it was hard to indulge in such frivolous displays of ostentation. Now, with its 83,000 dollar-millionaires (an elite club that grew by 19.3 percent last year), India is becoming familiar with the eccentricities of a growing class of super-rich who live to buy cars. Vintage car rallies are held in Delhi and Mumbai annually and new showrooms for Porsche and BMW are thriving.

Still, it's not easy to be a car collector in a country where the dreadful state of the road system is seen as one of the most pressing obstacles to economic development.

And it's a particularly peculiar passion to have in a city like Pune - a quiet, emerging software center in southern India - where the roads are truly abysmal, and where expensive cars are such a rarity that the locals go into a frenzy of excitement every time they see one.

Poonawalla finds driving in these conditions so nerve-racking that he has pretty much given it up. "I don't like driving any more; I no longer find it fun," he says mournfully. "The traffic is bad. The roads are bad. You have to worry about cows and dogs coming the wrong way up the street. It's very, very stressful and anyway I have high blood pressure".

Luckily he has a team of drivers to step in. When he bought the Phantom last year, he sent six of his chauffeurs to Mumbai for a specialist driving course with Rolls Royce staff who had been sent to India from Britain. (The family's other 20 or so drivers are not allowed to get behind the wheel of the Phantom)

Being rich in India's smaller cities remains a lonely affair and there's not much opportunity in Pune for flashing one's wealth - the occasional wedding, the odd party. On the rare instances he decides to drive himself in one of his most treasured automobiles, perhaps to take his wife out for a drink in the city's best hotel, Le Meridien, he is followed by a chauffeur driving a lesser vehicle ("My BMW maybe, or a Porsche") to ensure that no one smashes into the back of the really valuable car, and to make sure that there is a trained chauffeur on hand to help with parking.

Poonawalla, 34, is scrupulous in pointing out the details that he believes justify the Phantom's price tag. The words "Custom Built for Poonawalla" are embossed in silver on the doorsill, at about the spot where you might stamp a muddy foot stepping into the car. There are two telephones, a couple of televisions, an array of walnut paneling, the letter "P" stitched and embossed at prominent spots in and outside the car, a button that slowly closes the door for you (saving the wearisome labor of stretching out your arm), another button that pulls black curtains across all the back windows for total privacy, long black umbrellas that slot ingeniously into the door panels, with built-in drying systems so that raindrops don't mildew.

He demonstrated how the silver figure at the helm of the car, the flying lady, sinks inside the hood if anyone tries to steal it - although under the circumstances this is a rather redundant feature. The guards in pearl gray uniforms with gold-trimmed red sashes around their waists who stand beneath the cast- iron stags looming over his front gates ward off any potential thieves, and the car is never left unattended.

Poonawalla pauses to consider whether it was really worth the money. "Was it a good investment? No. The day you take it out of the showroom its value drops 30 percent. But I was looking for a nice car. This car offered a lot in terms of road presence, comfort and prestige," he says. "People ask me where I plan to drive these cars, what I'm going to do with them. But driving them is not really the point. My passion is just for spending time with them on Sunday morning. I like to check they've all been cleaned nicely, and that my chaps are not lazing around.

"It is a lot of money, but if you love cars, then that's a lot of car. These cars are all about attracting attention."

Grabbing attention in Pune is not difficult. If residents of India's biggest cities are becoming blasé when faced with displays of exceptional wealth, the novel thrill of big money is still intense in small-town Pune.

When he takes out his $450,000 Lamborghini (a present for his wife in May) to demonstrate the hysteria it causes, people on motorbikes swerve to follow him and passengers fumble to take pictures with their mobile phones. As it races along shady roads, beneath the long, dangling trellises of banyan trees, every head turns to look at a car painted the same yellow and black as the local three-wheeled rickshaw, but otherwise an alien phenomenon.

Strangely there are no number plates on the vehicle, but the chauffeur driving the car behind Poonawalla explains that his boss doesn't need to worry about that kind of detail. "Mr. Poonawalla is a big man. Nobody in the police would touch him. He's royalty here."

When the Lamborghini stops at the lights for a minute, dozens of beggars holding skinny, half-naked babies beeline for the car and start tapping on the window.

Poonawalla is undismayed. In a country where around 300 million people earn less than $1 a day, he claims he encounters no malice or envy. "Even though we live in such a poor country there is no resentment. You will always see a smile on a poor person watching the car go by," he insists, and drives away, offering no alms.

He finds it harder to keep his cool a few minutes later when there is a terrible crack as the low slung car drives at speed over a pothole. Dust flies everywhere, the car struggles on and Poonawalla makes a brave attempt at feigning indifference.   - By Amelia Gentleman International Herald Tribune   25 October 2006

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