In 2012, when Falguni Nayar decided to leave her high-profile job as CEO at Kotak Mahindra Capital Company, she told Kotak Mahindra group boss Uday Kotak that she was happy with the company but wanted to do something different. In the book How Uday Kotak Built a Valuable Indian Bank, Kotak recalls her telling him, “I will not compete with you.” When he pressed her on what she wanted to do, she said, “I’m passionate about doing something on the internet and beauty.”
Nine years later, that “something” happened. On November 10, her startup FSN E-Commerce Ventures, the parent company of beauty retailer Nykaa and India’s first female-led unicorn, made its debut on the stock exchange with its market valuation crossing the Rs 1 lakh crore ($ 13.47 billion) Mark. Nayar’s net worth, which owns around 52.56% stake in the company, increased to
US $ 7.90 billion (about Rs 58,635 crore), making her the second richest businesswoman after OP Jindal Group’s Savitri Jindal (net worth $ 18 billion according to Forbes list).
Nykaa joined the food delivery company Zomato, which listed its shares earlier this year, on the Rs 1 lakh crore market cap club. Paytm, whose 18.3 billion rupee IPO closed last week, is expected to join in the coming days.
While Nayar’s decision to float Nykaa at age 50, after more than two decades on the bench, may have come as a surprise, no one who knows her is surprised at her success.
That includes Harsha Bhogle, the cricket commentator, who is his groupmate from IIM-Ahmedabad. Bhogle, his wife Anita and Nayar, and her husband Sanjay were part of the 1985 high school group. Says Bhogle: “Falguni is smart, hard-working and fun-loving. She came from a simple Gujarati middle-class business family. She was in my section and her business background meant that she was always good at management accounting courses. “
Nayar began her career as a consultant at AF Ferguson & Co, followed by 18 years at Kotak Mahindra Bank. At the bank, she ran several businesses, including as CEO of Kotak Mahindra Capital and director of Kotak Securities, the bank’s institutional equity division.
In the book, Kotak relates that when Nayar wanted to join her husband Sanjay, former head of Citibank South Asia and now head of the Indian branch of KKR, a global investment firm, in London, she asked him to open Kotak Mahindra’s office there. . When Sanjay moved to New York later, Kotak asked him to do the same in the city on the east coast.
Nykaa was a complete break, with Falguni Nayar starting the company whose name means “heroine” in Sanskrit with no experience in the beauty business or retail.
The opening was there, and India is forecast to become a beauty and personal care business of Rs 1,98,100 crore by 2025, with a growth rate of 13% year-on-year in the last three years. However, as Nayar pointed out on Nykaa’s day of listing, it was “a great leap of faith” to build a platform “that at that time had few believers and many detractors.”
Nayar set out by targeting the 25-35 age group, “the most active buyers of BPC (beauty and personal care),” and concentrating on social media. Nykaa’s strategies included engaging beauty “creators”, influencers and celebrities, as well as maintaining a presence on social media and within the peer-to-peer multimedia community. As of March 31, 2021, it had a network of 1,363 influencers, including Generation Z trendsetters, beauty, fashion and lifestyle bloggers, makeup artists, and celebrities.
From an online store for multiple beauty and fragrance brands, Nykaa branched out into own fashion products and then an in-house beauty range. His first physical store was in Mumbai, called Nykaa Luxe. It now has 73 of them, in three different formats, in 38 cities, and has a portfolio of more than 1,500 brands. Nayar leads a team of more than 1,600.
After losses of 24.53 million rupees in 2019 and 16.3 million rupees in 2020, he made a profit of 61.84 million rupees in fiscal year 2021.
At the National Stock Exchange listing ceremony, Nayar said: “What has worked for us from the beginning is the relentless focus on some key pillars: doing the right thing on the part of our brand partners, developing the art of selling. retailer focusing more on creating customer delight than conversion, while at the same time building the business sustainably. “
Nykaa’s growth, as he admits, also coincided with an increase in aspirational spending, especially in Tier II cities, an increase in income, and more and more women joining the workforce. “The desire to present one’s best appearance on social media and among peers has led to a more sophisticated use of beauty products,” says the prospectus Nykaa submitted to SEBI.
The internet economy itself has exploded in ways that were least expected, particularly in the wake of the COVID-19 closures. E-commerce penetration (the number of people shopping online) in India grew 1.6 times, from 3% in 2019 to 5% in 2020, with room for further increase (in the US and China, the figure in 2019 was 23% and 11%, respectively). India also has great untapped potential in terms of people who are not yet Internet users.
While Nayar’s husband, Sanjay, and KKR have no role in Nykaa, KKR founder Henry Kravis owns about 1.1% of the shares. The couple’s 31-year-old twins are part of the business: Daughter Adwaita is the CEO of Nykaa Fashion and son Anchit, the CEO of Nykaa.com.
Some experts give a note of caution, saying that Nykaa’s current valuation is unsustainable and that it has to continue to meet investors’ expectations to hold. “The market will be saturated as more brands emerge, and as the efficiencies of listed brands decline, this valuation is not sustainable. But the point is, once you get a valuation, you will always run to keep it, ”says Harish Bijoor, Brand Guru and Founder of Harish Bijoor Consults Inc.
Nykaa says she understands the need to stand up in a highly competitive industry.
“Our competitors include … online marketplaces, brick-and-mortar retailers and brands that take a direct-to-consumer approach, effectively removing us from the … process,” says their filing with SEBI.
Bhogle believes that Nayar will build on his success, as he was never in it for “fancy appraisals.” “He had his own business in his blood … I know that his wealth, which I am afraid will be talked about a lot, will not affect the Falguni I have known all these years.”
Nayar says that her wish is for her story to be an example for others, especially women. On the day of the listing, when those numbers spiked, the 59-year-old said: “To everyone in India who has ever had a dream, especially the women, I hope that Nykaa’s journey, an Indian-born dream, owned and managed, come true. can inspire each of you to be the Nykaa of your lives. “