Reliance Retail to buy 49% in Naturals Salon by first half of Q4: sources

Through funds raised from the deal, Naturals is planning to expand its footprint across the country. It currently runs 700 salons in 20 states and is planning to increase that to 3,000 by 2025

India’s largest retailer Reliance Retail is expected to sign a deal with Naturals Salon and Spa to acquire 49 per cent stake in the Chennai-based company by the first half of the next quarter, said a source aware about the development. This is likely to mark the entry of Reliance Retail into the salon business.

“We expect the deal to happen in a month's time or by the first half of the next quarter,” the source said in terms of anonymity. Through the funds raised from the acquisition, the company is planning to expand its footprint across the country. At present, Naturals runs around 700 salons spread across 20 states and is planning to increase it to around 3,000 by 2025.

Reliance termed the news as speculative. “As a policy, we do not comment on media speculation and rumours. Our company evaluates various opportunities on an ongoing basis,” said a Reliance spokesperson.

“We have made and will continue to make necessary disclosures in compliance with our obligations under Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations 2015 and our agreements with the stock exchanges," he added.  Naturals officials did not comment on the development. According to data shared by the Chennai-based firm early this year, the size of the industry is about Rs 8,000 crore and is growing at around 18.5 per cent per annum. The company’s market share in the segment is around Rs 400 crore making it the top player in a segment that is largely unorganised.

Naturals extends its services in hair, skin and body care segments through four signature brands namely, Naturals Unisex Salons, Naturals W, Naturals Lounge, and Page 3 Luxury Salons. It was started by Veena Kumaravel as a standalone salon in 2000 and is seen as a pioneer in the unisex salon market in India. It started its franchise model in 2006. By 2025, it wants to create 1,000 women entrepreneurs from 400 now and create 50,000 jobs.

Reliance Retail has nearly 200 million registered customers buying across all its formats. It recorded more than 500 million footfalls across all its stores in FY22. During the second quarter of the financial year, it saw the highest ever footfall of 180 million across consumption baskets, which is a jump of over 23 per cent compared to pre-covid levels. The Mukesh Ambani-led retail chain has posted a 36 per cent jump in net profit during the July to September quarter of the current financial year to Rs 2,305 crore, compared to Rs 1,695 crore during the same period during the previous financial year.  The company’s gross quarterly revenue was at Rs 64,920 crore, up 43 per cent from Rs 45,426 crore during the second quarter of the financial year 2021-22.

According to the media reports, Reliance Retail was planning to expand its footprint in the consumer goods business. During the last quarter, Reliance Retail had acquired a majority stake in Mayuri Kumkum, which owns and operates Insight Cosmetics. There were also reports that it was in talks to acquire Kerala-based electronics and grocery retail chain Bismi, which is spread across the state with 30 stores.