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Streax & Vasmol Brands are positioned to take competition head-on: Manish Chhabra, CEO & MD, HRIPL
The Rs 600 crore-plus Hygienic Research Institute of India (HRIPL), the makers of hair colour brands—Streax and Vasmol—sees the business making up for the COVID19-related disruptions in FY-22, Manish Chhabra, CEO & Managing Director, HRIPL tells BW Businessworld.
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Please share the performance of HRIPL in the past 3 years - pre-covid and the current year post-covid
HRIPL has been growing at a CAGR of 16%+ from the last 3 years and maintained a double-digit EBITDA margin, with most of the brands maintaining leadership positions in their respective categories. Super Vasmol 33 Kesh kala and Vasmol Kali Mehendi have always maintained their number 1 position in the market whereas Streax Shampoo Hair colour maintains close to the number 2 position and has been growing at a CAGR of 25%+ even in the post Covid-19 scenario.
The nationwide lockdown earlier this year hugely impacted all businesses, us being no exception. But being in the FMCG sector, soon the business started picking up and even though the entire nation is still recovering, HRIPL brands have not only reached their pre-Covid averages but also started growing in various categories.
We continue to spend around 16-18% of sales on brand building and marketing. In the last 3 years, we have launched various new products and all have been well received in the market. It is a proud moment for the team to see we have gained market share in most of our products in the current financial year.
Were you profitable in the past three years? What were the revenue numbers in each of the past 3 financial years and the profit numbers?
We work in 65%+ gross margin for all products. We have clocked gross sales of Rs 600+ Crs in the last financial year and our company is growing in double digits for the last few years.
What's your estimate on full-year revenue numbers for FY21? Will you clock growth, stay at the same level, or expected to take a hit, and Why?
This year the overall performance has been impacted due to the extended lockdown, however most of the brands have bounced back much faster and started growing from Q2. In the short term, our endeavour is to achieve the last financial year numbers and grow in most of the states. Few states will see a slow growth where the Covid impact was higher and the markets opened only around July. The exit run rate is as per our strategic plan pre-Covid. Our medium to long term plan remains intact.
Being one of the oldest brands in the space, please talk about the competition in each of the categories and for each of your brands?
Vasmol has primarily been an oil-based hair colour brand. With changing consumer preferences towards more herbal and natural products, Super Vasmol Kesh Kala has benefited from this shift, so also our Kali Mehendi which is a low-priced offering from the brand has benefited hugely and both these brands are growing and less impacted because of the Covid. Streax has also benefited during this period and is growing fast. In the initial period when the salons were shut, people had no option but to go for the DIY Format and streax which has the largest range of shades in the retail DIY segment, was the best choice.Its shampoo hair colour format which is the easiest, quickest and easy to the pocket offering at Rs 20/- became the smartest choice for people and grew at a rate of 25%+. Though there is competition, because Streax offers affordable premium products to its consumers, it is the most preferred choice for consumers. HRIPL is also backed by a good distribution channel, especially in the rural and Tier 2 cities and with our team of passionate people, they could reach out to distributors and retailers faster.
How were the beauty and personal care space growing before Covid? What is the estimated size of the Branded/organized size of the beauty and personal care segment, especially where you have a significant presence?
The beauty & personal care category (BPC) is about $14 Billion and has been growing at a decent rate of 8-9%. Within BPC, hair care is the largest category (~ $ 3.3 billion). HRIPL plays in the hair care category through hair color and hair oils. Over the years, traction towards branded products have led to double digit growth in category. As to today, more than 80% of the market is the branded segment within hair colour.
What are the major consequences faced by your industry and salons in particular during lockdown?
The Streax Professional division, however, has recovered faster than expected. From September, we are seeing a sharp recovery as consumers have started going to salons for grooming. Streax has a range of products which are value for money for the salons and many small cities and towns prefer Streax as it gives the desired results and is also pocket friendly. Thus, in some places we have started clocking Pre-Covid numbers as well. During lockdown, the Streax PD team kept more than 25000 salons engaged with many seminars and workshops upgrading their knowledge and skills and also took the initiative to train them of DO’s and Don'ts when they opened their salons and offered attractive packages and loyalty programs making them the choice of brand.
What's your strategy for competing with foreign brands dominating the personal care market?
For brands it's all about positioning and quality. Both Streax and Vasmol brands are positioned to take up this competition head-on. Being an Indian company, we have developed products that suit the Indian Hair type, unlike foreign brands which are developed to suit a different hair type. Our products give great results at an affordable price to our consumers, which gives us the advantage. There will always be a consumer for foreign labels but those are not our consumers and we do not even attempt to target them.Covid has however changed that trend as those consumers because of lack of availability, choose our brands and have now shifted as they have experienced the desired results.
What is your current distribution strategy?
With restrictions on travel being lifted, our sales team is able to reach out to all our distributors like before and we are now focusing on reaching out to the rural market more strongly. Our e-commerce division has also become stronger and we are focusing to grow the same.
How do you see 2021-22 panning out for your business?
HRIPL always believes in continuous innovation of products and following what our customers want and at the same time doing things that can enhance the experience of the existing product range. So that is something which we will keep working towards in the future. We always work with a 3-5 year business plan projection and devise our strategies accordingly. This year I would call it a break year in terms of achieving our business goals. However, with the current exit run rate, next year we will reach our target for the year 2021-22.