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Beauty and personal care Unicorn Good Glamm Group is actively scouting for investors to raise around Rs 200 crore to Rs 250 crore, as it grappled with financial challenges which recently led to the exit of three directors from its board.
Sources privy to the development said that the company is actively streamlining its operations to address various challenges.
“Regarding the salary delays, it only affected 15 per cent of the leadership team, and they have since received their payments,” said a person.
The Good Glamm Group in a LinkedIn post said it was in the midst of restructuring and a subsequent fundraise.
“As a part of our restructuring, our Board is also being reconstituted and new members will be joining our Board,” the company said on LinkedIn. “We would like to thank Vishal Gupta, Anand Daniel and Gaurav Kothari for their valuable contributions. While roles may be evolving, our partnership remains stronger than ever.”
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Anand Daniel, partner at Accel, Vishal Gupta, partner at Bessemer, and Gaurav Kothari, a principal at Prosus Ventures, have stepped down as independent directors, according to the sources.
This comes at a particularly tough time for the company, which is dealing with a funding crunch, layoffs and salary payment delays for senior team members.
The Mumbai-based company was founded in 2015 by Darpan Sanghvi, and later joined by Priyanka Gill, Naiyya Saggi and Nowshad Rizwanullah. It has raised a total of $432 million from investors like Warburg Pincus, Prosus, Bessemer Venture Partners, Accel, L'Occitane, and Amazon, as per data from Tracxn.
As of April 2024, its valuation stood at $1.25 billion.
In recent years, The Good Glamm Group has acquired several companies, including The Moms Co, Sirona Hygiene, BulBul, Organic Harvest, Vidooly, MissMalini, and ScoopWhoop. However, industry sources said that the company’s “inorganic strategy” has not yielded the expected benefits.
“They were attempting to build a platform through acquisitions and investing heavily in an inorganic growth strategy, but that hasn’t paid off, as many of the companies they acquired had different growth trajectories. In fact, some of them weren’t even growing,” said a source familiar with the matter.
“While they are now seen as an acquisition target, they may not command the same valuation as beauty brand Minimalist, which was recently acquired by Hindustan Unilever for Rs 2,955 crore,” he said.
In 2024, The Good Glamm Group reduced its workforce by 15 per cent or 150 employees as a part of the restructuring exercise. The company has not yet filed its annual report for FY24. However, in FY23, it achieved a 2.5x increase in revenue, reaching Rs 603 crore, up from Rs 240 crore in FY22, according to Entrackr. During the same period, the company reported losses of Rs 917 crore.
Consolidation
India’s beauty and personal care (BPC) industry is entering a consolidation phase with global giants seeking a grip over the changing consumer habits, according to the analysts and industry sources.
At the same time, even the home-grown digital commerce firm Nykaa is buoyed by the success of its early buyouts.
Analysts are now betting on sectoral consolidation deals gathering momentum as the companies in the overcrowded direct-to-consumer (D2C) space face challenges related to scaling up, funding and profitability.
Over 80 new-age consumer brands have entered the BPC segment in the recent past. Many of them are becoming potential merger and acquisition (M&A) targets for multinational companies as well as large legacy firms, as the industry moves into an inevitable consolidation phase, analysts commenting on the trend said.
They said this trend may spur large companies such as Hindustan Unilever and L’Oreal and firms like Nykaa, which had an early mover advantage, to buy stakes or acquire these D2C companies. Nykaa has already been a leading consolidator with a string of acquisitions, with Dot & Key and Earth Rhythm being notable. It also acquired stakes in Nudge Wellness, and KICA. It also acquired local discovery and e-commerce platform Little Black Book (LBB).
“The strategy for D2C firms related to ‘growth at all costs’ followed by bigger funding rounds without bothering about losses is not working anymore. They are realising that investors want growth with profitability,” said Sanjay Jain, a board advisor and director at Taj Capital, a boutique investment advisory firm. “If they go for an initial public offering (IPO) and the valuation doesn’t meet the expectations of their investors, then M&A is the way for them to get funding,” said Jain.
