Saturday, November 7, 2009
FRANKFURT (AFP) - – Megha Mittal stepped into the fashion spotlight Friday with the purchase of troubled high-end German brand Escada, backed by the clout of in-laws who own the global steel giant ArcelorMittal.
Megha and husband Aditya Mittal, financial director of the world's biggest steel group and the only son of group owner Lakshmi Mittal, were welcomed with open arms by Escada staff who saw them as a "dream partner."
Some workers "cried for joy" at the company's headquarters in Munich, southern Germany, added Ursula Dreyer, head of Escada's works committee.
After working for the US investment bank Goldman Sachs and pursuing studies in architecture, Megha, has sought for 18 months to become involved in the fashion sector, her true passion, according to a Mittal family spokeswoman.
She had also studied at the Wharton business school in the United States where she met her husband. Both are 33 years old.
Lacking fashion experience, Mittal nonetheless said she would be able to connect Escada with Indian suppliers with whom she is in contact.
The Mittal family already has interests in the textile sector and had considered investing in the Italian fashion house Gianfranco Ferre.
Mittal intends to back a strategy drawn up by Escada chief executive Bruno Saelzer that foresees the development of less expensive lines of clothing, while retaining a "glamour factor," a source close to the matter said.
Saelzer pursued a similar strategy when he was boss of a rival German clothing company, Hugo Boss.
"Megha thinks he is the right person to keep running the company," the Mittal spokeswoman said, adding that Megha would sit on the supervisory board and would work to improve Escada's tarnished image.
"She is a very refined woman, very beautiful and very intelligent. She has a real feel for quality," the spokeswoman said.
The tale would seem like something straight out of a Bollywood extravaganza were Escada's problems not so real.
Heavily indebted and suffering from falling sales, the group reported a net loss of almost 100 million euros (150 million dollars) in the first half of its current fiscal year, and a 33 percent drop in the second quarter revenues.
Escada filed for insolvency in mid August and began looking for an investor, with more than a dozen suitors expressing interest, including Sven Ley, son of Escada founder Wolfgang Ley.
Job cuts will have to be made in the group's future restructuring, but should remain minimal, a source close to the matter told AFP.
Negotiations with unions are due to begin next week.
Financial details of the deal have not been released, but experts quoted in German press reports estimated Escada was sold for around 30 million euros, on top of which the group would need around 100 million more over the next two years.
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