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Featured | 7 June 2013

Portfolio Focus: JM Financial Investee Enrich Hair And Skin Solution

by Pranav Puri
 
@pranav

In 1997, Vikram Bhatt launched its first unisex salon, Enrich in Mulund, Mumbai with an investment of R6 Lacs and today under the same brand there are 50 salons across metros - 35 in Mumbai, 7 in Ahmedabad, 7 in Pune and 1 in Bangalore.

Revenue Model:

The average size of an Enrich salon is 1,000 sq ft with a staff strength of 20. Each outlet requires an investment of R50-70 Lac.

Bhatt stated, 50% of business comes from hair, 30% from skin, 15% from product sales and the remaining 5% from the membership fee paid by customers who sign up for the company's loyalty program.

Currently its Loyalty Program has close to 1,00,000 plus members and generates about 80% of the current revenue of the company and the membership fee forms 4% of the total revenues of the company.

He also added,their average ticket size is R700-800 and average footfalls are 40-50 on weekdays and 100 on weekends.

All Enrich salons are managed by the parent company as Bhatt believes that a bad franchise store may affect the brand image in the long run.

Financial Performance Of Enrich:

Particulars(Rs Mn) 2012 2011 2010
Revenue 420.46 335.17 233.7
EBITDA 14.53 35.1 42.3
PAT 0.15 14.1 20.15


Investment By @JM_Financial_Li:

On 15th September 2010, JM Financial through @JM_Financial16 made an investment of R10 Cr in Enrich. JM Financial was allotted 2500 equity shares at R40,000(FV- R100) each. Few days later on 19th it received 2000 shares from the directors of the company Bhatt(350), Rohit Dhedia(350), Mukesh Joshi (1050), Mulchand Dhedia(250).

On 6th December, 2010 JM was allotted 31,500 bonus shares.

On 15th June, 2011 JM bought another 20,000 Class A equity shares in the company through, @JM_Financial_T. The shares were bought at R5000 (FV-R100) aggregating to a total investment of R10 Cr.

JM Financial Ventures had transferred its 36000 equity shares in Enrich to JM Financial Trustee Company on 6th June, 2010.

As per the 2012 annual return filed by Enrich, JM Financial holds 56000 equity shares in the company through JM Financial Trustee Company.


Industry Scenario:

As per the Indian Salon Report 2013, which was released during the Salon Congress 2013, Indian Salon industry stands at a staggering $2 Bn mark and is expected to touch $3.5 Bn by 2015.

Over the past five years the organized salon industry has grown at 30%.

India comprises 25% of organized salon market, which will increase its share to 30% by 2015.

The Indian salon franchise ecosystem today has a support of over 5,000 salon franchisees. Franchise salons will stand to cover 25% of the overall organised industry by 2020 and will grow to be more than $1 Bn.

Around 61% of males and 54% of females are visiting salon on a monthly basis and spending more than 60% of the respondents spending between R1,000-2,000 on beauty services.

Indian youth (in the age group 15 to 34 years) comprising over 34% of the population is the core target group for the Indian Salon Industry. This group is expected to cross 400 Mn by 2015.

While per capita spend on beauty services in India has gone up to $2.3 from $1.2 to 2010, it still lags significantly behind countries like China (spends $10.3) and Malaysia ($ 30.2).

Past Transaction In This Industry


Date Target Company Investor Size ($ Mn)
22/05/2012 R&R Salons Private Limited Everstone Capital partners 19.84
28/09/2011 Mystic Cure Limited Brand Capital N.A
1/9/2010 Jawed Habib Hair & Beauty Limited Brand Equity Treaties Limited 2.56
21/12/2010 Jawed Habib Hair & Beauty Limited Greenfield Investment 2 1.8


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