There are big bucks to be made in the beauty business. With this realisation, the private equity fund Indivision has invested Rs 50 crore into the prominent beauty major VLCC for an undisclosed equity stake.
The fund infusion will help VLCC to expand organically and better exploit the new opportunities being created by the huge retail boom in India.
Indivision is sponsored by the Future Group (which owns Pantaloon), with Goldman Sachs, Citicorp, Louis Vuitton as other major investors. "The health and fitness business, already worth Rs 2500 crore in this country, is bound to explode in the next few years.
"VLCC, which has mastered the services model and has moved into products as well, is on its way to becoming a multi-dimensional brand that will mean good return on investment for us in future," said Indivision Managing Director Sanjiv Gupta.
VLCC plans include not only expanding the number of its centres from 100 to about 300 in two years but also exploiting Pantaloon’s retail prowess that come with the deal.
"There are lots of forward and backward linkages to this deal with services, products and training strengths coming from the VLCC stable, and the real estate and retail prowess from Indivision’s connection with the Future Group," said VLCC Managing Director and CEO, Sandeep Ahuja.
This is the second major infusion of funding VLCC has received. The company got $10 million from a fund managed by the Hong Kong-based CLSA Private Equity in return for an undisclosed stake in 2004.
According to industry sources, the company that closed 2005-06 with a turnover of Rs 200 crore and is growing at a CAGR of nearly 40 per cent, is currently worth Rs 1,200 crore.
VLCC also plans to foray further into the international market by expanding the number of centres from seven to 28 in the next two years across UAE as well as Bangladesh, Sri Lanka, Nepal.
To cater to the upswing in demand, VLCC is also setting up its second plant in Haridwar with an investment of Rs 12 crore for its herbal and ayurvedic product range.