Good looking legacy

Anil Adamane gives a long, hard look before answering a question on the potential for his business of beauty salons in Nagpur, Pune and Ahmedabad. “It’s quite simple,” he says. “My target market is about 1% of Nagpur’s 4 million population. That 40,000 will spend an average ₹400 per month, which adds up to a monthly revenue of ₹1.6 crore. So, it actually means we are addressing a ₹20 crore market every year [only in Nagpur].” 

Peer into one of Adamane’s 10 Legaato salons (six across three formats in Nagpur, two each in Pune and Ahmedabad) and you can see he has a point — college-going teens and chattering matrons shell out several ₹500 notes on body therapy and skin brightening treatments. “Yes, Indians are price-conscious customers,” Adamane says. “But give them the service and they really spend.” Saroj Siwach, who works on skin treatments at Legaato, says it’s quite normal to see 20-year-olds spending about ₹5,000 on grooming themselves. “I think, all of this comes from the need to be socially accepted,” she says. 

Legaato, which now employs 200 people, does an annual turnover of ₹6 crore and a handsome 35% net margin. “The good part is that this business is completely recession-proof,” says the 42-year-old Adamane, who barely keeps from chuckling. “If one does not grow by at least 30-35% each year, there is no point in being here.” 

Up, down and up

Adamane’s business card has a slightly odd tagline: ‘the legacy continues’. He explains that Legaato (legacy in Italian) is his second innings in the business of beauty salons. For a commerce postgraduate, Adamane’s work experience is eclectic — he tried running an STD booth, pitched LIC policies and even sold pirated prints of Bollywood films from Dubai. It was a 1996 visit to Tirupati with his wife that changed him. “I decided that I was done with what I was doing. It was time to start something stable,” he says. “But I did not know what to do.”

Back in Nagpur, he fell ill. There were pimples all over his face, which made shaving impossible. That drove him to a barber where he got quite a shock. “It was the dirtiest place I had ever seen,” he says. Despite that he had a “full house”. It was Adamane’s big business moment. Within months, he had opened Lucky’s, his first salon, with a loan of ₹1 lakh from the Nagarik Sahakari Bank. He also opened a South Indian restaurant next to the salon. “I was hoping at least one business would click,” he says with a laugh. No points for guessing which one did — Lucky’s had a first month revenue of ₹13,000. Adamane was set to go. 

The next big break came when he set up a salon at Nagpur’s Centre Point Hotel in 2000. “We managed to clock a turnover of ₹1.68 lakh just by extending the working hours,” Adamane says of his first chain of salons that came to be known as Bellezza. Officials from L’Oreal came by after they heard of the upstart. “That changed everything for us since they brought concepts like design and style. In the end, we managed to open Nagpur’s first unisex salon in 2003.” L’Oreal’s deal was simple. Adamane only had to use their products, which would be supplied at no cost. “It was an exclusive arrangement and we learned about the business,” he says. 

The next few years — till 2008 — were dreamlike. Bellezza grew to 29 salons that cut across the Vidarbha region and could be found in cities such as Raipur, Ahmedabad and even Mumbai. Adamane got himself a partner and other principals became involved subsequently, which brought his shareholding down to 25%. “What I did not realise was that the other partners had joined together to throw me out and, in 2009, I had to sell my holding in Bellezza for ₹2.25 crore,” he says, his regret evident. Adamane was suddenly without a business and the resultant stress took a toll on his health. “I thought I would be better off if I got out of the salon business.” 

But he changed his mind when some of his former employees (around 80) came to him with a simple request — get back to the salon business. “I have become cautious after the experience,” he says. “I guess it’s a case of once bitten…” Clearly, he’s not taking any chances with his shareholding this time — Adamane holds 60% and his wife and close family members own the rest. 

Far and wide

Now, Adamane has also decided to expand to more than one format. “The L’fonso [for Alphonso mangoes, a play on aam or common] salon is for the mass market and needs only about a third of the 3,500 sq ft we give our Legaato salons,” he says. “Set-up costs are also lower. If it costs ₹2,000 per sq ft to set up a Legaato salon, a L’fonso can be done up for only about ₹600 per sq ft.” Currently, three of his six Nagpur salons are in the Legaato format (a slew of treatments and a haircut for ₹260, for instance), there are two L’fonsos (fewer options and ₹150 a haircut), and the high-end Sixth Element, which also features a spa. All three formats broke even in about six months. 

Perhaps that is why Adamane has set himself a very ambitious milestone. He is targeting a ₹100-crore turnover through 600 outlets in the next five years. By his estimates, that is only a fraction of the market in the six states (Maharashtra, Gujarat, Madhya Pradesh, Rajasthan, Chhattisgarh and Delhi) that he wants to expand into. His eventual goal is to get 100,000 customers a day into his 600 shops and get them to spend an average ₹200 per head. But the expansion will come at cost that is estimated to be around ₹100 crore. He says capital and labour will be less of an issue if he aggressively adopts the franchisee model. The downside could be slippage in quality of service.

Investors have shown interest but Adamane will sell only on his own terms. Given his past experience he wants to retain control even if that means raising debt instead of equity.  He is also extremely keen on a market-on-the-move — foot massages and facials on long-distance trains and at airports. “We initiated discussions with Railway officials and are convinced that it is at least a ₹1,000 crore market,” he claims grandiosely.

In any case, Adamane likes his small-city address. “We are kings here and there is no reason to let go of this position,” he says. His staff agrees. “It’s important to be aware of what is going on because customers have become very inquisitive when it comes to fashion,” says Mohammed Sharif Malik, a hairdresser at Legaato. Adamane himself admits to competing with GenNext. “I need to understand their language,” he says. “I keep telling myself: at the end of the day, I am just a barber.”