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Co-founder & CEO of Honasa Consumer Pvt Ltd (parent company of Mamaearth, The Derma co, Aqualogica & Ayuga), Varun Alagh said in his interview with The Hindu BusinessLine that Honasa has doubled its revenue to around ₹920 crore in FY 22 as compared to ₹460 crore revenue recorded in FY 21. The company was last valued at $1.2 billion and is now reportedly eyeing a $3 billion valuation in its initial public offering planned for next year.
How has Honasa Consumer’s business grown till now?
In financial year 2021, we were at about Rs. ₹460 crore in revenues and in FY’‘22 we have delivered over 100 per cent growth on that. The company continues to grow at a disruptive pace. We have been able to grow sustainably as well and achieved profitability in FY 21, which continues till now.
What factors helped Honasa to turn profitable? Given that D2C businesses tend to burn a lot of cash in customer acquisition.
It was a combination of multiple things - one, we are a 70 per cent plus gross profit business. Second, even in D2C as you grow, your repeat percentage increases, the P&L starts to look better, because it is new customer acquisition which leads to cash burn. Third factor is the proliferation of other channels. In the last two years, we have built a very strong offline business as well which is relatively more profitable. So, as the contribution of offline grew, the business profitability has also improved. Currently, 70 per cent of our sales is from online channels which includes both D2C and marketplaces and the rest 30 per cent comes from offline channels.
Experts say the D2C market is ripe for consolidation, because of the growing acquisition costs and global funding slowdown. Does Honasa plan to make new acquisitions this year?
We have done a few acquisitions and we would now rather focus on ensuring growth of an acquired business. We are able to deliver value and generate value out of the already done acquisitions. Integration and running the acquired business in itself has challenges. We want to build a playbook on how to grow an acquired business. Once we have strong comfort levels there, and depending upon the kind of asset which is available in the market as well as how it fitting into our portfolio strategy, we will surely evaluate acquisitions.
Honasa is reported to have 51 per cent female workforce. How did you go about ensuring equal representation in the workforce, were there any active steps taken towards this?
We started as a 50 per cent female company because it was just me and Ghazal Alagh (co-founder Honasa Consumer Pvt Ltd). That’s the balance we have always tried to ensure right because we believe - diverse point of views bring a lot more value to the table, especially in beauty and personal care business where the key influencer and buyer is women. If we take decisions in the company, without enough women representation in the room — we will not take correct decisions and they will not be sustainable. At the lead generation level, when CVs are generated for a position, we ensure a 50-50 gender split. Then, as long as fair opportunity was given, it will ensure that correction happens in workforce percentages. Second, we constantly prod our teams to have diversity in meeting rooms. We have done that for our partners as well. If we don’t find diversity on the other side of the table, we highlight that and sometimes that also becomes a reason why we don’t work with a partner
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