“I think for us the IPO made a lot of sense. It’s something that was always on the cards since the early days. Nykaa’s founder, Falguni Nayar, is an ex-investment banker. She has taken many companies public and saw the value that the public markets bring to a company in terms of corporate governance, as well as long-term sustainability for the business,” he said.
He added Nykaa wants to be around for many years in the industry and, in order to serve their customers in the best way possible, they took the business to the public markets.
“We have been very focused on corporate governance since the early days. If you look at our company, even as a private company, we have independent directors on the board. So, I think we’ve trained ourselves from the early days that a listing was likely to be in our future. And today, we’re thrilled with the way everything went,” he said at Ascent eConclave.
The conversation then switched to Nykaa’s focus on profitability as market analysts had voiced concerns that the company was not focused on profitability.
Brushing aside the apprehensions, Nayar said growth is paramount for the company.
“Profitability also needs to be considered, because that’s how we want to build the culture internally, that there needs to be respect for capital. There is respect for shareholders and investors. And as a result, I think there are a lot of things we did differently than other e-commerce companies. There’s a culture of frugality, there is a culture for respect of capital and delivering return on equity,” he said.
Nayar also talked about the growth of the beauty and fashion section in the e-commerce industry and said that it is growing faster than the GDP.
He added that the consumers today are very digitally savvy, and he respects them, as they are willing to pay the right price for quality at a time when the sector is riddled with counterfeit issues globally.
“I think it’s good for the consumer to see more options. But we think that again, there is enough room for multiple players. It’s a massive opportunity…we are very optimistic that this market will grow and there will be space for a couple of players to co-exist,” he said.
Talking about omnichannel presence, Nayar said that in a country like India, which has got a very large offline retail presence, it’s important to do both online and offline. For the categories of beauty and personal care, there is a large touch and feel element. Also, certain luxury products require trials before consumers are willing to buy.
“Therefore, we think the two will co-exist. Offline remains a massive market and we want to be dominant both online and offline…the two can co-exist very synergistically,” he said.
Nykaa had 84 physical stores as of September 30, 2021.
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