See FY17 revenue from Sephora at Rs 150-250 cr: Arvind

Arvind has tied up with cosmetics and beauty retailer Sephora to run their operations in India, i.e, three stores in Delhi and one in Pune. Sephora is owned by the French luxury conglomerate LVMH Moet Hennessy Louis Vuitton.Speaking to CNBC-TV18, J Suresh , MD & CFO, Arvind, said the company is no longer a textile-only company, but has morphed into a brand play. He believes Sephora will fetch Rs 150-200 crore revenue in FY17. Below is the transcript of J Suresh’s interview with Latha Venkatesh & Sonia Shenoy on CNBC-TV18.Latha: can you just take us through this Sephora deal what does it mean to the profit & loss (P&L)?A: We have just tied up with Sephora. It is a franchise arrangement. Currently, we have taken over four stores. In terms of P&L, it is a bit early to make a projection but what we are looking at over a period of next four-five years is a turnover of around Rs 500 crore when we have 40-45 stores. Sonia: You said currently you have taken over 4 stores. When will Sephora be brought to India?A: Sephora is already in India. They were present with one other partner. In fact they opened their first store in Delhi as early as 2012. So, they were running four stores – three in Delhi and one in Pune. Now it is a change of partner and now we have taken over the operations. Sonia: Apart from Delhi and Pune what is your plan say in terms of the next one to two years? Which are the other cities that you look to open up to and how many stores are you looking at say in the next one to two years? A: We are looking at opening at least 10-15 stores every year for the first three years. Immediately we are going to open in Mumbai and Bangalore.Latha: You gave us a five year plan but what happens say in FY17 itself to yours numbers? How much may they add to revenues? A: FY17 - we are looking at a turnover of anything between Rs 150-200 crore.Latha: What is the EBITDA typically when you make that kind of revenues?A: EBITDA should workout anything – 10-12 percent kind of an EBITDA when we do Rs 150-200 crore. Latha: Are you looking at more such tie-ups. I mean this is not your main garment area. So, clearly you have stepped out and you are defining yourselves as Lifestyle Company. So, should we expect more lifestyle products coming into your range?A: What we have done is we have now gained a very good expertise on retail operations. So, basically we are leveraging our retail operations capability in this venture. However, definitely if there is an opportunity for us to leverage that retail operations capability and it is in the lifestyle space we will look at it. We have quite a handful of tie-ups which we have done recently. Our focus is going to be consolidate and grow all this ventures rather than looking for opportunities. Of course any big opportunity comes its way we will definitely look at it.Sonia: Overall the beauty and personal care market how much do you think that could grow in India because Sephora as you mentioned had launched about four years back but has had a very slow movement in India so the beauty and personal care market how much do you think it can grow in the next couple of years?A: It is a large market currently it is around Rs 15,000 crore market growing at compound annual growth rate (CAGR) of around 18 percent. The premium end of the market which is around Rs 2,500-3,000 crore it is growing at a CAGR of around 25-30 percent. It is a largest beauty retailer in the world. Unfortunately, they have little bit of chequered history in India, but whichever market they go they dominate the beauty market. With the combination of Arvind’s capability and Sephora’s products and retail strength we should do quite well in the segment as we go forward.