sample of indian salon industry report (extracts)

Reevolv Advisory Services

Private Limited

Indian Salon Industry Report

For any queries or detailed information

contact us on +91 – 22 – 6002 2001 / +91 – 22 – 2436 3161

E-Mail at [email protected]

September 2015


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Table of Contents

Particulars Page Nos.

1. Executive Summary 5

2. Wellness Industry Overview 6

2.1. Background 6

2.2. The Wellness Cluster 7

3. Indian Salon Industry Overview 8

3.1. Market Opportunity 8

3.2. Growth Drivers 12

3.3. Nature of Industry 14

3.4. Porters Five Force Analysis 16

3.5. Key Challenges of the Industry 19

3.6. Business Model 21

3.7. Key Success Factors 24

3.8. Unit Economics 27

4. Geographic Overview 28

4.1. City-Wise Market Size, Key Players and Number of Outlets 28

4.2. Pricing Analysis 30


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5. Private Equity Interest in the Industry 31

5.1. YLG Salons (R&R Salons Pvt. Ltd) 31

5.2. VLCC (VLCC Health Care Ltd.) 32

5.3. Enrich (Enrich Hair and Skin Solutions Pvt. Ltd.) 33

5.4. B;blunt (Bhabani Blunt Hairdressing Private Limited) 34

5.5. Jean-Claude Bigiune (JCB Salon Private Limited) 35

6. Player Profiles 38

6.1. Summary 38

6.2. Affinity 40

6.3. b:blunt 46

6.4. Belleza 50

6.5. Enrich 54

6.6. Green Trends 60

6.7. Jawed Habib 64

6.8. Juice 68

6.9. Lakmé 72

6.10. Looks 76

6.11. Naturals 79

6.12. Strands 83


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6.13. VLCC 87

6.14. YLG 92

6.15. JCB Salons 96

6.16. Belita India 100

6.17. International Players in India 103

7. Annexure 104


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1. Executive Summary

Beauty consciousness has dawned due to rising affluence of consumers. With an increase in the number of

households upgrading to a higher consumption lifestyle, there is an accelerated growth in the Indian beauty

space. Branded salons have emerged as a key growth constituent. Growing affluence has resulted in

increased experimentation and the desire to look better. This has accelerated the growth of beauty products

and services. Salons are at the centre of that growth.

With this industry perspective salon chains like ________, _______ etc. are establishing their presence

across the country. In addition to home grown players, foreign chains like _____________ etc. are also

setting up salons to groom the Indian consumer.

Clearly, the predominantly unorganized locally run beauty salon market is at an inflection point. The

mushrooming of branded chains is expected to completely change the landscape a few years down the line,

ushering in a new era of trained salon personnel, offering services based on global insights and professional

products with the latest international technologies. Also there is a lot of activity happening in the on-demand

home beauty services platform market with many new players like ______________ etc. starting operations.

The total size of salon and allied services market in India was around Rs. XXX billion in 2012, which has

grown from ~Rs. XXX billion in 2005 at a CAGR of XX% p.a. The urban and rural market has been growing at

a pace of XX% p.a. and XX% p.a. respectively.

As per our estimates, the industry is currently at Rs. XXX billion in 2012 will grow at a CAGR of XX% p.a. to reach ~Rs. XXX billion in 2020. The urban market is estimated to grow at a CAGR of XX% (2015-2020E) to reach Rs. XXX billion in 2020E from ~Rs. XX billion in 2012 and rural market is estimated to grow at CAGR of XX% (2015-2020E) to reach ~Rs. XXX billion from Rs. XXX billion in 2012.

The size of the organised market was approximately Rs. XX billion in FY2010 which has increased to ~Rs.

XX billion by 2015 growing at a CAGR of ~XX% p.a. At this rate, organised market has potential to reach Rs.

XX billion by 2020. In terms of geographies, southern region seems to be more organised as compared to

other regions with major salon chains like ______________ etc.

However, as with any other industry, it is not without challenges. The scarcity of trained professionals is the

biggest challenge in the industry due to the less number of training institutions. This supply-demand gap is

leading to an upward salary cost for trained professionals coupled with higher attrition. Industry players find it

extremely difficult to scale up because of lack of bank funding. The higher rentals in cities are acting as an

impediment to growth.


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2. Wellness Industry Overview

2.1. Background

2.2. The Wellness Industry Cluster

Fig 1: The Wellness Industry Cluster

Pictorial Representaton


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3. Salon Industry Overview 3.1. Market Opportunity

Total Market

Market Size Rs. 2005 2012 2015E 2020E CAGR%

(2005–12) CAGR%

(2015–20E) Total (Rs. In billion)

Urban (Rs. In billion)

Rural (Rs. In billion)

Urban Market %

Rural Market %

Urban & Rural Market Share

Share of Urban and Rural Market (2005-2020E)

Source — Reevolv estimates, NSS Reports

012345678


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Urban Market (Tier 1, 2 and 3 Cities)

Total Market Size – Tier 1, 2 and 3 cities (2012)

Cities No. of Cities Rs. million

Tier 1

Tier 2

Tier 3

Total

Source :

Tier 1 Urban Market Break up

Tier 1 Market Size (2012) in Rs. Million

Tier 1: Delhi-NCR, Greater Mumbai, Kolkata, Bangalore, Chennai, Hyderabad, Pune, Ahmadabad (cities with population

of more than 5 million).

Tier 2: Agra, Allahabad, Amritsar, Asansol, Aurangabad, Bhopal, Coimbatore, Chandigarh, Dhanbad, Durg-Bhilainagar,

Vishakhapatnam (GVMC), Ghaziabad, Gwalior, Indore, Jabalpur, Jaipur, Jamshedpur, Jodhpur, Kannur, Kochi, Kanpur,

Kota, Kozhikode, Ludhiana, Madurai, Malappuram, Mysore, Lucknow, Meerut, Nashik, Patna, Nagpur, Raipur, Rajkot,

Ranchi, Srinagar, Surat, Thiruvananthapuram, Thrissur, Tiruchirappali, Vadodara, Varanasi, Vasai Virar City and

Vijaywada. (Cities with population of 1 to 5 million).

Tier 3: Ajmer, Aligarh, Amravati, Bareilly, Belgaum, Bhavnagar, Bhiwandi, Bhubaneswar, Bikaner, Bokaro, Cuttack,

Dehradun, Durgapur, Erode, Firozabad, Gorakhpur, Gulbarga, Guntur, Guwahati, Hubli-Dharwad, Jalandhar, Jammu,

Jamnagar, Jhansi, Kollam, Kolhapur, Malegaon, Mangalore, Moradabad, Nanded, Nellore, Puducherry, Rourkela,

Saharanpur, Salem, Sangli, Siliguri, Solapur, Tiruppur, Ujjain, Warangal (cities with population of 0.5 to 1 million).


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State wise Urban and Rural Market

State wise - Urban Market

State wise Urban Market Share (2012) in Rs. Million

Total Urban Market – Key states and per capita expenditure (2012)

State Per Capita Expenditure in Rs.

Urban Population (2012) in Mn

Urban Market (2012) in Rs. Mn

Market Share as a Percentage of Total

Urban Market

Source : Reevolv estimates, NSS Reports


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State wise - Rural Market

State wise Rural Market Share (2012) in Rs. Million

Total Rural Market – Key states and per capita expenditure (2012)

State Per Capita Expenditure in Rs.

Rural Population (2012) in Mn

Rural Market (2012) in Rs. Mn

Market Share as a Percentage of

Total Rural Market

Source : Reevolv estimates, NSS Reports


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3.2. Growth Drivers Fig 8:

Fig 9:

012345678

0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5

Category 1

Category 2

Category 3

Category 4


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Fig 10:

Source —

3.3. Nature of Industry

3.3.1 Unorganised

0

1

2

3

4

5

6

7

8


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3.3.2 Organised

Fig 11: Comparison of Unorganised and Organised Salons

Parameter Unorganised Organised


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3.4. Porters Five Force Analysis Fig 12:


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3.5. Key Challenges of the Industry

3.6. Business Model

Fig 13: Typical Salon Business model

Pictorial Representation


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3.7. Key Success Factors

Fig 15: Critical Success Factors

Pictorial Representation


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3.8. Typical Unit Economics


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4. Geographic Overview 4.1. City-Wise Market Size, Key Players and Number of Outlets

Source — Reevolv Research

4.2. Pricing Analysis – Tier 1

Male Haircut Female Haircut



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5. Private Equity Interest in the Industry


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5.1. Player Profile

6.2.1 Overview

Parameter Description

Company Name

Profile •

Wellness Segments

Owned by/ Key shareholders

No. of Outlets

Business Model

Products

Target Customer Segment

Brands

Source: Company Website and Reevolv Research

6.2.2 Locations

North Total

No. of Cities

No. of Outlets Tier1

No. of Outlets Tier2

No. of Outlets Tier3 and below

Total – Outlets

Major States/Cities

Source — Company website


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6.2.3 Pricing

Cities

Tier I


6.2.4 Talent Sourcing


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6.2.5 Financials Profit & Loss Account for the year ended 31st March (Rs. Mn) FY2012 FY2013 FY2014

Balance Sheet as at 31st March (Rs. Mn) FY2012 FY2013 FY2014

Source: Company Filings, Totals may not tally due to rounding off errors

Key Ratios FY2012 FY2013 FY2014


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6.16. International Players in India

Name Description


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7. Annexure 7.1. Ratios

Key Ratios

Cost of Material Consumed % Cost of Material Consumed

Total Revenues X 100

Employee Expenses % Employee Expenses


Selling & Distribution Expenses % Selling & Distribution Expenses


Administrative Expenses % Administrative Expenses


EBITDA % EBITDA


EBIT % EBIT


PBT % PBT


PAT % PAT


ROCE % EBIT

Capital Employed X 100

ROE % PAT

Net Worth X 100

Capital Employed Total of Asset / Liabilities

(Liabilities = Shareholders funds + Loan Funds + Deferred Tax + Minority Interest)

Working Capital Turnover Ratio Total Revenues

Net Current Assets excl Cash Bank

Net Fixed Assets Turnover Ratio Total Revenues

(Net Fixed Assets excl Capital Work in Progress)

Inventory Days Inventory

(Cost of Material Consumed) X 365

Debtors Days Debtors



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7.2. Abbreviations

Description

Bn Billon

CAGR Compound Annual Growth Rate

CCD Compulsory Convertible Debentures

CCPS Compulsory Convertible Preference Shares

CECO Company owned E-Commerce portal

CY Calendar Year

EBIT Earnings before interest and tax

EBITDA Earnings before interest, tax, depreciation and amortisation

EBO Exclusive Brand Outlet

EV Enterprise value

FY Financial year

L Luxury

LFR Large Format Retail

M Mass segment

MBO Multi Brand Outlet

MMR Mumbai Metropolitan Region

Mn Million

NA Not available

NCR National Capital Region

NM Not meaningful

NR Not relevant

NS Not specific

OEC Other e-commerce portal

P Premium

P/E Price to earnings

PAT Profit after tax

PBT Profit before tax

ROCE Return on capital employed

ROE Return on equity

SP Semi-premium

TC Traditional channel


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About Reevolv

Reevolv is a boutique consulting and investment banking company offering a "One Stop Shop" in the areas of

business strategy, financial advisory and operations consulting to corporates and private equity funds.

We service our clients in their constant re-evolution process through our in-depth industry research, domain

understanding, our timely and superior execution capabilities and strong network to provide customized

solutions to our clients.

With a host of implementation focused services spanning across functions, we ensure that our clients reach

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industry dynamics.

Founded in 2008, Reevolv is a team of CAs, MBAs and Engineers with functional and industry expertise and

diverse background of investment banking and management consulting.

Disclaimer This report is published for information only. Reevolv Advisory Services Private Limited or any of its affiliates, group companies, directors, employees, agents or representatives shall not be liable for any loss or damages whether direct or indirectthat may arise from or in connection with the use of the information in this document. This document is the sole property of Reevolv Advisory Services Private Limitedand prior permission is required for full or part reproduction.This information is strictly confidential and is being furnished to you solely for your information. This information should not be reproduced or redistributed or passed on directly or indirectly in any form to any other person or published, copied, in whole or in part, for any purpose.

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You can also email the research analyst at

Shilpa Bhattar

[email protected], [email protected]

mailto:[email protected]

sample of indian salon industry report (extracts)

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