VLCC in talks to buy firms in Europe, South – East Asia

Wellness and Beauty Company VLCC Healthcare Ltd is in advanced talks to buy a European nutraceuticals and skincare firm and a South-East Asian wellness company as it makes a fresh bid to enter new markets and businesses.

VLCC is carrying out due diligence on the two companies, managing director Sandeep Ahuja said in a phone inter- view.

New Delhi-based VLCC has earmarked $50 million (around `220 crore) for acquisitions and expansions, he said.

Ahuja didn't give more de- tails on the proposed purchases but said expansion plans include residential wellness centres for treating lifestyle-related ailments such as diabetes and hypertension.

VLCC has mandated investment bankers to explore fund- raising options to back the acquisitions and the new business. Fundraising could include debt, an equity sale or a combination of both, said Ahuja, without divulging how much his firm wants to rise. For other initiatives such as expanding its VLCC Institute of Beauty, Health and Management across India and abroad, the firm will use its internal accruals.

VLCC, founded in 1989 by Vandana Luthra, has nearly 225 outlets across 90 cities, including 14 in West Asia and one in Kathmandu, Nepal, ac- cording to its website.

It plans to open 20 new company-owned outlets in India this fiscal year and double its overseas centres in the next two years, said Ahuja.

India's wellness industry is estimated to be around `11,000 crore and projected to grow at 20-30% annually, ac- cording to a joint survey con- ducted by lobby group the Federation of Indian Chambers of Commerce and Industry and consultancy firm Ernst and Young.

Ahuja expects VLCC to grow at 35% annually on the back of the acquisitions and an enhanced footprint.

VLCC had similar plans earlier that didn't quite materialize. In 2009, the company had said it was working to- wards overseas acquisitions, a tie-up with a US medical spa and a public share sale. Ahuja said an initial public offering (IPO) of shares is still on the cards. “Considering the pace at which we are growing, there is always a temptation to wait for another six months and get better valuations. The current market is not very viable for IPOs, we don't see many issues happening. We would consider an IPO window of 24 months”, he said.

VLCC had revenue of about `500 crore in the ended 31 March.

Pradip Kanakia, partner and leader-healthcare, PricewaterhouseCoopers, said new markets will add to VLCC's growth.

“Taking the India model overseas will be a huge positive for the company as the health- care needs of people in other developing markets too are the same”, said Kanakia.

But he also said the company needs to address issues such as high attrition before it heads overseas. “They have to travel some distance before they reach there in terms of stabilizing their team, including the top deck, and maintaining their service standards and bringing in some consistency in their processes before leveraging it overseas,“ he said.

(Source-: mintlive.com)