A beautiful alliance

RETAIL: Who would have thought two heavyweights would tie up to make money out of the slimming biz.

Slimming the Indian waistline is, for many companies, becoming the perfect method of fattening their growth portfolio.

Pioneers of the health and wellness movement in India, VLCC, riding high on the growing health market, is set to increase operations through its recent strategic alliance with Indivision, a private equity fund promoted by Future Capital, the financial services arm of the Future Group (Pantaloon Retail).

Indivision has invested Rs 50 crore in the company and will actively participate in adding value to the distribution and brand positioning of VLCC.

Witnessing a compound annual growth rate of 40 per cent for the last five years, VLCC's alliance with Indivision comes at a time when the company is investing huge sums into opening of franchisees and international centres and venturing into the personal care and health food segment through retail outlets.

Sandeep Ahuja, managing director and CEO, VLCC Healthcare, says, "Our expansion plans required huge investments but we were looking for an investor who would strategically fit in with our plans. Indivision is perfect for us in this sense."

In the organised slimming services business, the company currently occupies 40 per cent of the market share.

The alliance makes sense since VLCC's retail arm is set to benefit from Future Group's real estate and malls and its own retail outlets as well. So, you might find a VLCC personal care and health foods products corner at a Pantaloon store very soon.

In fact, VLCC is hoping to provide Future Group's retail outlets with staff trained at its own institutes. With 100 centres in 48 cities across India and five locations in the UAE, the company plans to meet its target of 300 centres within India and 28 centres in the GCC countries by end 2008.

Sanjiv Gupta, managing director, Indivision, is optimistic about the alliance. "It is a risk but then life is a risk. Going by the current trend, the health and beauty sector is bound to witness spectacular growth in both, service and product segment," he says.

VLCC's strong back-end operation, expanding overseas business and concept of health food is what attracted Indivision into investing in the company.

Gupta, however, concedes that VLCC being a new entrant into the product retail market will require guidance and expertise, which is where Indivision will add value. "We will help in perfecting the supply-chain part of the business," he adds.

In the pipeline for VLCC are new brands that include a medi-spa, more institutes, retail of health foods VLCC Alive and more R&D centres. Its overseas expansion will help the company scale up nationally, giving even more leverage to the alliance.