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 or
e-mail us at research@reevolv.in
2 0 1 7

2
Table of Contents
Particulars Page Nos.
1. Executive Summary 4
2. Wellness Industry Overview
2.1. Background 6
2.2. The Wellness Cluster 7
3. Indian Salon Industry Overview
3.1. Market Opportunity 8
3.2. Growth Drivers 12
3.3. Nature of Industry 14
3.4. Evolution of the salon industry 16
3.5. Porters Five Force Analysis 17
3.6. Key Challenges of the Industry 19
3.7. Business Model 21
3.8. Key Success Factors 24
3.9. Trends in the Salon Industry 27
3.10. Unit Economics 28
4. Geographic Overview
4.1.City-Wise Market Size, Key Players and Number of Outlets 29
4.2.Pricing Analysis 31
5. Private Equity Interest in the Industry
5.1.YLG Salons (R&R Salons Pvt. Ltd) 32
5.2.VLCC (VLCC Health Care Ltd.) 33
5.3.Enrich (Enrich Hair and Skin Solutions Pvt. Ltd.) 34
5.4.Bodycraft (Bodycraft Salon Skin & Cosmetology Private Limited) 35
5.5.Spalon (Spalon India Private Limited) 36
5.6.B;blunt (Bhabani Blunt Hairdressing Private Limited) 37
5.7.Jean-Claude Bigiune (JCB Salon Private Limited) 38

3
Particulars Page Nos.
6. Player Profiles
6.1. Summary 43
6.2. Affinity 45
6.3. B:Blunt 49
6.4. Enrich 53
6.5. Green Trends 59
6.6. Jawed Habib 63
6.7. Juice 69
6.8. Lakmé 73
6.9. Looks 77
6.10. Naturals 81
6.11. Strands 85
6.12. VLCC 89
6.13. YLG 94
6.14. JCB Salons 98
6.15. Belita India 102
6.16. Bodycraft 105
6.17. Spalon 109
6.18. International Players in India 113
7. Annexure 114

4
1. Executive Summary
Market Size
The total size of salon and allied services market in India was around Rs. xxx billion in 2016, which has grown
from ~Rs. xxx billion in 2012 at a CAGR of xxx p.a. The urban and rural market has been growing at a pace of
xxx p.a. and xxx p.a. respectively.
As per our estimates, the industry will grow at a CAGR of xxx p.a. to reach ~Rs. xxx billion in 2020.
The urban market is estimated to grow at a CAGR of xxx (2016-2020E) to reach Rs. xxx billion in
2020E from ~Rs. xxx billion in 2016 and rural market is estimated to grow at CAGR of xxx (2016-
2020E) to reach ~Rs. xxx billion from Rs. xxx billion in 2016.
The size of the organised market was approximately Rs. xx billion in 2014 which has increased to ~Rs.
xxbillion by 2016 growing at a CAGR of ~xx p.a. At this rate, organised market has potential to reach Rs.
xxbillion by 2020.The share of organised players in urban salon market was xx in 2016.
Growth Driver
Evolution
Trends in the industry
Challenges

5
2. Wellness Industry Overview
2.1. Background
2.2. The Wellness Industry Cluster

6
3. Salon Industry Overview
3.1. Market Opportunity
Total Market
As per our estimates, the industry will grow at a CAGR of xxx p.a. to reach ~Rs. xxx billion in 2020E.
The urban market is estimated to grow at a CAGR of xxx (2016-2020E) to reach Rs. xxx billion in
2020E from ~Rs. xxx billion in 2016 and rural market is estimated to grow at CAGR of xxx (2016-
2020E) to reach ~Rs. xxx billion from Rs. xxx billion in 2016.
Market Size
Rs. 2005 2012 2016 2020E
CAGR%
(2012–16)
CAGR%
(2016–20E)
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)
2005 2012 2016 2020E

7
Urban Market (Tier 1, 2 and 3 Cities)
The total salon and allied services market in urban cities (Tier 1, 2 and 3 cities) is around Rs. xxx
billion in 2016 with tier 1 cities constituting xx of the total urban market.
Total Market Size – Tier 1, 2 and 3 cities (2016)
Cities No. of Cities Rs. million
Tier 1
Tier 2
Tier 3 & below cities
Total
Tier 1 Urban Market Break up
. Tier 1 Market Size (2016) in Rs. Million
Tier 1: Delhi-NCR, Mumbai, Kolkata, Bengaluru, Chennai, Hyderabad, Pune, Ahmadabad (cities with population of more
than 5 million).
Tier 2: Agra, Allahabad, Amritsar, Asansol, Aurangabad, Bhopal, Coimbatore, Dhanbad, Chandigarh, GVMC, Gwalior,
Indore, Jabalpur, Jaipur, Jodhpur, Kannur, Kanpur, Kochi, Kota, Kozhikode, Lucknow, Ludhiana, Madurai, Malappuram,
Meerut, Mysore, Nagpur, Nashik, Patna, Rajkot, Ranchi, Srinagar, Surat, Thiruvananthapuram, Thrissur, Tiruchirappalli,
Vadodara, Varanasi, Vijayawada.
Tier 3: All the remaining urban cities not covered in tier 1 and 2.

8
State wise Urban and Rural Market
State wise - Urban Market
Among the states, Maharashtra with ~Rs. xxx
billion (2016) has the largest urban market share
followed by Tamil Nadu (~Rs. xxx billion), Uttar
Pradesh(~Rs.xxx billion) and Andhra Pradesh
(~Rs. xxx billion).
State wise Urban Market Share (2016) in Rs.
Million
Total Urban Market – Key states (2016)
State Urban Population (2016) in Mn Urban Market (2016) in Rs. Mn
Market Share as a Percentage
of Total Urban Market
Maharashtra
Tamil Nadu
Uttar Pradesh
Delhi
Andhra Pradesh
Karnataka
Gujarat
West Bengal
Madhya Pradesh
Kerala
Others

9
State wise - Rural Market
State wise Rural Market Share (2016) in Rs. Million
Total Rural Market – Key states (2016)
State
Rural Population (2016) in
Mn
Rural Market (2016) in Rs.Mn
Market Share as a
Percentage of Total Rural
Market
Uttar Pradesh
Andhra Pradesh
Maharashtra
Bihar
Karnataka
Madhya Pradesh
Rajasthan
West Bengal
Tamil Nadu
Gujarat
Others

10
3.2. Growth Drivers
Fig 8: India’s Working Population Break-Up
(2006–2021E)
Fig 9: Break-up of India’s Consumer Expenditure (Food and Non-Food)
2006E 2011E 2016E 2021E
0% 20% 40% 60% 80% 100%
1987-88
1993-94
1999-2000
2004-05
2009-10

11
Fig 10: Urban Population and Urbanization Rate %
2010 2015 2020 2025 2030 2035 2040 2045 2050
Million

12
3.3. Nature of Industry
3.3.1 Unorganised
3.3.2 Organised
Fig 11: Comparison of Unorganised and Organised Salons
Parameter Unorganised Organised
Service Quality
Training/SOPs
Hygiene
Product Quality
Customer Engagement
Location & Infrastructure
Proximity
Ambience
Pricing

13
3.4. Evolution of the Salon Industry
3.5. Porters Five Force Analysis

14
3.6. Key Challenges of the Industry
3.7. Business Model
3.8. Key Success Factors
3.9. Trends in the Salon Industry
3.10. Typical Unit Economics
Fig 16: Store level unit Economics for a typical unorganised and organised player
Unorganized Organised
Average area
Typical number of service points1
Revenue per month per service point (INR)
Commission to employees (as a %age of sales)
Rentals*
Per chair no. of employees
Salary cost per employee per month (INR)
Salary cost as a %age of sales (excl. commission)
Raw material (as a %age of sales)
Other cost (as a %age of sales)
Operating margin (as a %age of sales)
Capital expenditure – Rs. Mn
ROCE %

15
4. Geographic Overview
4.1. City-Wise Market Size, Key Players and Number of Outlets
Cities
Population
(2011)
(million) (1)
Population
(2016)
(million) (1a)
Population
(2020)
(million) (2)
Population
Growth
Rate %
(2011–
2016)
Population
Growth
Rate %
(2016–
2020)
Population
Growth
Rate %
(2011–
2020)
GDP (2005)
USD billion
(3)
GDP (2020)
USD billion
(3)
GDP
Growth
Rate %
Average
HH
Income* -
2007-08
(INR) (4)
Est. Size of
the Salon
Market
(Rs.
million) -
2016
Top key organized
players
No. of Centers of
salons covered in
this report
Tier 1 FY2014 - 1,089
FY 2017 - 1156
Delhi
Mumbai
Kolkata
Chennai
Bengaluru
Hyderabad
Pune
Ahmadabad

16
Cities
Population
(2011)
(million)
(1)
Population
(2016)
(million)
(1a)
Population
(2020)
(million)
(2)
Population
Growth
Rate %
(2011–
2016)
Population
Growth
Rate %
(2016–
2020)
Population
Growth
Rate %
(2011–
2020)
GDP (2005)
USD billion
(3)
GDP (2020)
USD billion
(3)
GDP
Growth
Rate %
Average
HH
Income* -
2007-08
(INR) (4)
Est. Size of
the Salon
Market
(Rs.
million) -
2016
Top key organized
players
No. of Centers of
salons covered in
this report
Tier 2
Surat
Jaipur
Kanpur
Lucknow
Nagpur
Indore
Coimbatore
Bhopal
Ludhiana
Allahabad
Amritsar
Raipur
Chandigarh

17
4.2. Pricing Analysis – Tier 1
Male Haircut Female Haircut
Tier I

18
5. Private Equity Interest in the Industry
Source : Company Filings and Reevolv Research
Source : Company Filings and Reevolv Research

19
6. Player Profiles
6.1. Summary
Name of Salon
Operating
Since
Owned By
No. of outlets
Category
Wellness
Segments
Target Segment Concentration
Revenues
FY2012 FY2014 FY2017 FY2016 (Rs. Mn)

. Indian Salon Industry Report
20
6.2. Affinity Salon
Overview
Parameter Description
Company Name
Profile
Wellness Segments
Owned by/ Key
shareholders
No. of Outlets
Business Model
Products
Target Customer Segment
Brands
Pricing
Haircut
Cities Female Male
(Rs.) (Rs.)
Tier I ~800 ~400
Source — Reevolv Research

21
Geographic Spread
Tier I Cities Tier II Cities
State Wise Region Wise
Source : Company website
Talent Sourcing
-
1
1
2
2
3
3
4

22
Financials
Profit & Loss Account for the year ended 31st March (Rs. Mn)
FY2014 FY2015 FY2016
Revenues from Operation
Other Income
Total Revenues
Cost of Materials Consumed
Rent, Rates and Taxes
Administrative and General Expenses
Employee Expenses
Selling and Distribution Expenses
Total Expenditure
EBITDA
Depreciation
EBIT
Interest
Profit before Prior Period Items and Tax
PBT
PAT
Balance Sheet as at 31st March (Rs. Mn)
FY2014 FY2015 FY2016
Share Capital
Share Application Money
Reserves & Surplus
Shareholders’ Funds
Secured Loan
Unsecured Loan
Optionally Convertible Debentures
Loan Funds
Deferred Tax Liability
Total Liabilities
Gross Block
Net Block
Capital work in progress
Investments
Inventories
Sundry Debtors
Other Current Assets
Total Current Assets & Advances excl. Cash & Bank
Current Liabilities
Provisions
Total Current Liabilities & Provisions
Net Working Capital excl. Cash & Bank
Cash & Bank
Net Working Capital incl. Cash & Bank
Total Assets

23
Key Ratios FY2014 FY2015 FY2016
Expenditure Ratios
Cost of material consumed as a % of Total Revenues
Rent, Rates and Taxes as a % of Total Revenues
Administrative & Other Expenses as a % of Total Revenues
Employee Expenses as a % of Total Revenues
Selling and Distribution Expenses as a % of Total Revenues
Profitability Ratios
EBITDA %
EBIT%
PBT %
PAT %
Return Ratios
ROCE %
ROE %
Financial Ratios
Total Debt / Net Worth
Secured Debt / Net Worth
Total Debt / EBITDA
Turnover Ratios
Working Capital Turnover Ratio
Net Fixed Assets Turnover Ratio
Inventory Days
Debtors Days
6.3. International Players in India

24
7. Annexure
7.1. Ratios
Key Ratios
Cost of Material Consumed %
Cost of Material Consumed
Total Revenues
X 100
Employee Expenses %
Employee Expenses
Total Revenues
X 100
Selling & Distribution Expenses %
Selling & Distribution Expenses
Total Revenues
X 100
Administrative Expenses %
Administrative Expenses
Total Revenues
X 100
EBITDA %
EBITDA
Total Revenues
X 100
EBIT %
EBIT
Total Revenues
X 100
PBT %
PBT
Total Revenues
X 100
PAT %
PAT
Total Revenues
X 100
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)

25
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

26
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diverse background of investment banking and management consulting.
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