Co-founder and 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 over the past in FY22 as compared to revenues of ₹460 crore in FY21. The company was last valued at $1.2 billion and is now eyeing a valuation of $3 billion in FY21. its initial public offering scheduled for next year.
How has Honasa Consumer’s business developed so far?
In FY2021, we were at around Rs. ₹460 crore in revenue and in FY22, we achieved more than 100% growth on that. The company continues to grow at a disruptive rate. We were also able to grow sustainably and achieve profitability in FY21, which continues to date.
What factors helped Honasa become profitable? Since D2C companies tend to burn a lot of money in customer acquisition.
It was a combination of several things – first, we are a 70%+ gross profit company. Second, even in D2C as you grow your repeat percentage increases, the P&L starts to improve, because it’s new customer acquisition that drives cash consumption. The third factor is the proliferation of other channels. Over the past two years, we have also built a very strong offline business, which is relatively more profitable. Thus, as the contribution of offline has increased, the profitability of the business has also improved. Currently, 70% of our sales come from online channels, which include both D2C and marketplaces, and the remaining 30% come from offline channels.
Experts say the D2C market is ripe for consolidation, due to rising acquisition costs and slowing global funding. Does Honasa plan to make any new acquisitions this year?
We have made a few acquisitions and would now prefer to focus on growing an acquired business. We are able to create value and generate value from the acquisitions already made. Integrating and managing the acquired business itself presents challenges. We want to build a playbook on how to grow an acquired business. Once we have a good level of comfort there, and depending on the type of asset available in the market as well as how it fits into our portfolio strategy, we will surely evaluate acquisitions.
Honasa would have 51% female workforce. How did you go about ensuring equal representation in the workforce, were there any active steps taken in this direction?
We started as a 50% female business because it was just me and Ghazal Alagh (co-founder Honasa Consumer Pvt Ltd). It’s the balance we’ve always tried to strike because we believe that diversity of perspective brings much more value to the table, especially in the beauty and personal care industry where key influencers and buyers are women. If we make decisions in the company, without sufficient female representation in the room, we will not make the right decisions and they will not be sustainable. At the lead generation level, when resumes are generated for a position, we provide a 50-50 gender split. Then, as long as a fair opportunity has been given, this will ensure that the correction occurs as a percentage of the workforce. Second, we constantly push our teams to have diversity in meeting rooms. We have also done this for our partners. If we don’t find diversity on the other side of the table, we point it out and sometimes that also becomes a reason why we don’t work with a partner.
July 22, 2022