Enrich Salons to raise $7 million to fund expansion, tackle competition
Mumbai: Mumbai-based salon chain Enrich Salons and Academy is looking at raising $5-7 million in funding as it looks at expanding its presence and combating online competition, Vikram Bhatt, the company’s founder and director, said.
The beauty salon and services chain acquired on-demand services firm Belita Vikram Bhatt, in an all-stock deal in July, taking on start-ups such as Urbanclap.com and Housejoy.in that provides beautician services at home. The value of the transaction wasn’t disclosed.
“In the next four weeks, we will initiate the process for raising funds,” Bhatt said. The last round of funding the 19-year-old firm raised was in 2010-11 when it sold a significant minority stake to JM Financial Ltd. “JM Financial has two more years according to its agreement and then it would exit,” said Bhatt.
The beauty and wellness segment is attracting investor attention as brick-and-mortar chains compete with start-ups providing such services to customers at home. Earlier this month, French salon and spa chain Jean-Claude Biguine (JCB) made two acquisitions—hair solutions specialist Trica Hair Clinic and home service brand The Home Salon—spending an undisclosed amount.
Enrich Salons has integrated Belita’s home service options for basic services such as waxing, threading, manicure and pedicure from 18 locations in Mumbai. In six months, the beauty services chain will cover 40 locations in Mumbai and in the next year expand to cover all its 57 salons in five cities of western India.
After pausing on expansion in the past two years when it focused on renovating some of its outlets, Enrich is seeking again to increase its network. It plans to open 30 salons per year over the next three years, said Bhatt, who plans to end fiscal 2017 with 60 salons.
Enrich Salon ended 2015-16 with a revenue of Rs125 crore and expects to end 2016-17 with a revenue of Rs145 crore and an operating profit of 10%, said Bhatt.
“Typically, investors have issues of scalability and finding a good exit. Entrepreneurs that are able to demonstrate an ability to scale should not find raising funds an issue,” said Ritesh Chandra, executive director and head-consumer, Avendus Capital Pvt. Ltd.
Chandra noted companies like VLCC Health Care Ltd and Kaya Ltd have successfully scaled their operations.
The beauty and wellness sector in India has seen 20 PE/VC deals worth $32 million since 2011, according to data from VCCEdge. India’s beauty and wellness industry, including fitness and slimming clinics, and counter sales of beauty and rejuvenation products, is expected to grow from Rs55,000 crore in 2015 to Rs80,000 crore in 2017, according to a 2015 report by KPMG Advisory Services Pvt. Ltd.