Leaving legacy through brands built for India: Honasa's Ghazal Alagh

Co-founders Varun and Ghazal Alagh aim to take Indian beauty brands global as they unveil Honasa's initial public offering, eyeing Rs 1,701 crore in funding

“We are on a mission to build a pure-play beauty and personal care company out of India, which crafts brands for India and takes them to the world,” said Ghazal Alagh, co-founder and chief innovation officer of Honasa Consumer Limited (HCL), which owns brands like Mamaearth and The Derma Co, in a social media post as the firm launched its initial public offering (IPO) on the stock exchange on Tuesday.

“We are always thinking about how we can leave a legacy through our brands built for India,” said Alagh, who started the day with a lot of excitement, nervousness, mixed feelings, and emotions.

Honasa's IPO had been subscribed 12 per cent on 31 October, the first day of bidding. Investors bought 3,607,000 equity shares against the offer size of 2.89 crore shares. It aims to raise Rs 1,701 crore via a maiden public issue.

The total offer size comprises a fresh issue aggregating up to Rs 365 crore in equity shares and an Offer for Sale (OFS) of up to 41,248,162 equity shares by selling shareholders (the Total Offer Size).

Those offering shares in the OFS include promoters, founders, and investors. Some of them include Sofina, Stellaris, Kunal Bahl, Rohit Kumar Bansal, Rishabh Harsh Mariwala, and Bollywood actor Shilpa Shetty Kundra. The offer will close on Thursday, 2 November 2023. The price band of the offer has been fixed at Rs 308 to Rs 324 per equity share of face value of Rs 10 each.

Ahead of the issue, Honasa announced that it has mobilised Rs 765 crore from anchor investors.

Gurugram-based Honasa was co-founded in 2016 by the husband-wife duo Varun Alagh and Ghazal Alagh. She started her career with NIIT as a corporate trainer. As part of her role, she trained managers and engineers from various IT companies in SQL, J2ME, and Oracle.

She co-founded Mamaearth, driven by the passion for making early parenting stress-free. At the firm, she now spearheads innovation, community, and new brand initiatives. Focusing on the psychology and personal care product requirements, Alagh works closely with a large number of consumers to develop products that address the problems they face on a daily basis. The aim is to make toxin-free, Made Safe-certified products for everyone.

Other co-founder Varun Alagh, who is also the chief executive officer at Honasa, has over 10 years of leadership experience in sales and marketing roles with top FMCG brands. He started his career with Hindustan Unilever. He also had a four-year stint at Coca Cola where he was instrumental in launching Coke Zero in India. An alumnus of XLRI, Jamshedpur and Delhi College of Engineering, Varun leveraged his understanding of the FMCG market to build Mamaearth and its toxin-free products portfolio.

Varun and Ghazal have scaled up Honasa into a house of brands with a digital-first approach. Built on a consumer-insights-led innovation and channel approach, the company has built an in-house portfolio of digital-first consumer brands like Mamaearth, The Derma Co., Aqualogica, and Ayuga. Apart from the owned brands, the firm acquired stakes in BBlunt and Dr Sheth’s.

“Focusing most on our consumer love and a business model which is replicable across all our brands, we have built not just one but six consumer-loved brands in just six years,” said Ghazal Alagh, an alumna of Panjab University and New York Academy of Art. “We are proud of what we have achieved. But we don’t rest on our past laurels. Our focus is on the future growth and success of this company.”

Under the leadership of the co-founders, Honasa has become the largest beauty and personal care company in India. The company recently said it has turned around in Q1-FY24, reporting a net profit of Rs 24.71 crore against a net loss of Rs 11.52 crore in Q1-FY23 and a net loss of Rs 151 crore in FY23. The gross profit margin of 17.03 per cent in Q1-FY24 allows for a high-profit pool to leverage as cost efficiency sets in. The company said it is on the cusp of an increase in profitability trajectory with business model efficiency and operating leverage setting in.

Through its online channel, the firm has serviced over 18,000 pin codes in India during the six-month period that ended on 30 September 2022. The company was able to make products available across over 700 districts in India. This was done through its omni-channel distribution network across online and offline channels. In the same period, the company is estimated to have retailed products through more than 100,000 FMCG retail outlets in the country.

While the IPO is just another milestone in the life of the company, Alagh said the commitment and focus are on their larger goals. Quoting from American poet Robert Frost’s poem 'Stopping by Woods on a Snowy Evening,' Alagh said, “The woods are lovely, dark and deep, but I have promises to keep, and miles to go before I sleep, and miles to go before I sleep.”