Salon chain Naturals’ is looking for a Rs 100-crore PE infusion to go national. The amount will be raised in two tranches of Rs 50 crore each, for a 25-30% stake in the company. It is gleaned from sources that Aditya Birla Group’s private equity arm Aditya Birla Private Equity Fund, Peepul Capital and TVS Capital are in the fray.
Confirming that all the three funds had approached the company, the 40-outlet chain Naturals promoter CK Kumaravel said it has appointed Veda Corporate Advisors to finalise the transaction. “The private equity partner would be decided upon by the month-end and the deal inked by December,” he told ET.
Naturals — run by Mr Kumaravel and his wife Veena, who is the CEO — is the second salon to attract PE funding after the Bangalore-based YLG Salon & Spa. In March this year, Helion Venture Partners infused Rs 20-crore in YLG.
“We see tremendous scope in the salon business with margins exceeding 20%,” he said adding they are on track to make a pan-India presence. By 2012, Naturals is eyeing a turnover of Rs 350 crore from 350 outlets that would entail a total investment of Rs 150 crore. Naturals works on a franchisee model, where the partner puts in 50% of the required investment.
Of the Rs 75 crore needed in the first phase, Rs 50 crore would be raised through the PE route while the balance would be from internal accruals, Mr Kumaravel said. The second tranche of Rs 50 crore would be used Naturals’ proposed 150 outlets that would be fully-owned by the company.
The salon chain plans to ramp up presence to 100 outlets across south by the end of this fiscal. Five of its salons are in Hyderabad. It has one each in Bangalore and Mangalore and the rest in Tamil Nadu. It has also lined up its Kerala foray next month, with a salon at Thiruvananthapuram.
Outside south, its first footprint would be in Pune, where it has already finalised a franchisee partner. The test launch would happen in October, Mr Kumaravel said, adding they were looking at mini-metros like Nagpur, Ahmedabad, Jaipur, Lucknow, Chandigarh, Ranchi and Raipur, before entering other metros.
The Rs 40-crore Naturals is in parleys with the specialised hair care brand Farrell and others to expand its basket of high-end value-added services like hair transplant, extensions and temporary tattoos.
Ask him about competition, he responds “it is not really from organised players like Lakme or CavinKare’s Limlite and Green Trends, but from the unorganised sector.”
Nationally, the salon business is estimated at Rs 1,800 crore, with the unorganised sector accounting for 80%.
Source: Economic Times