Spanish porcelain company Llardo is likely to float its own subsidiary after forging a joint venture in 2006. Currently, Lladro operates in India through Spa Lifestyle Pvt Ltd, an equal joint venture between Lladro and Indian company Spa Agencies.
Nikhil Lamba, COO, Lladro India, said, “Lladro likes to have its own subsidiaries across the world. In India too, it is in the process of increasing its stake and might become a subsidiary of the parent company.” Lladro already has subsidiaries across its largest markets in the US and Japan.
The company has ruled out the single-brand retail route in India, as it entails local sourcing which is not be feasible for a luxury brand due to quality issues. “Being a luxury brand, Lladro would not like to go in for 30 per cent local sourcing, which is mandated currently for single-brand retail in the country. So the other option is to become a subsidiary,” added Lamba.
The family-run company in Spain entered the country through a distributor nearly 12 years ago. The same distributor became its joint venture partner in 2006.
“Lladro needed an Indian partner to support it when it entered India. An experienced Indian partner was expected to help in getting the right rental deals with landlords and mall owners,” added Lamba.
Today, it has eight company-owned boutiques and 10 shop-in-shop counters. It imports porcelain products from its manufacturing base in Valencia, a coastal city in Spain.
However, being a 100 per cent imported brand has taken a toll on its margins with the rupee depreciation, but Lladro has not raised prices significantly. “Our margins have shrunk, but we have tried to stick to our old prices. Price increase has been limited to 5 per cent across a few products,” he said.
Interestingly, Lladro has been taking annual price increases across its other markets by 10-15 per cent.
To make up for its shrinking margins, it has decided to introduce higher price points this festival season. “Higher values will lead to better margins. We have introduced the Ram Darbar at Rs 8 lakh, while the Goddess Laxmi introduced last season was priced at Rs 6 lakh,” he said.
The luxury brand retails its porcelain pieces from Rs 3,500 upwards going up to Rs 1 crore. Apart from porcelain sculptures, it has also entered the lighting and home décor segment.