How Falguni Nayar, Now India¡¯s Wealthiest Woman, Built A Beauty Empire Worth Rs 38,700 Crore

Nykaa founder Falguni Nayar has now become India's richest woman, as per the IIFL Wealth Hurun India rich list 2022 which was unveiled on Wednesday.

With a net worth of ?38,700 crore, the investment banker-turned-entrepreneur beat ?Biocon?'s Kiran Mazumdar Shaw, who ranked 67, and climbed the ladder board to rank 33 on the top 100 billionaires list.

Nayar and her family's flagship beauty and wellness products company Nykaa grew by 345% in the last year, the data revealed. She saw her rank jump from 169th spot in the list which has the likes of Gautam Adani, Mukesh Ambani and Cyrus Poonawalla.

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Only woman in this list, 59-year-old became the second biggest wealth gainer this year after businessman Ravi Modi of Vedant Fashions, ranking fifth in the Top 10 Biggest Gainers List. In the span of five years, Nykaa's wealth has soared by 1,388 per cent.

But, how did she do it? What helped her build her empire? Let's find out.

The beginning

Nayar began a career in consulting with A.F. Ferguson & Co, after graduating from the prestigious IIM Ahmedabad. She went on to work with Kotak Mahindra Bank where she would spend 18 years of her professional life.

During her run in the company, she managed various businesses and was also the managing director of Kotak Mahindra Investment Bank. The former investment banker is a board member of Aviva insurance and Dabur India. She is also an independent member on the Tata Motors Board.

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The vision

After spending over 20 years in finance, she left her job as an investment banker and entered the startup industry with her online beauty and personal care retail venture. She founded Nykaa with an investment of USD 2 million.

Her goal was to make quality cosmetics easily available to Indian consumers. ¡°I started Nykaa at the age of 50 with no experience. I hope the Nykaa journey can inspire each of you to be the Nykaa of your lives,¡± Nayar said before her company¡¯s listing at the NSE.

The right decisions

Despite challenges, once they started investing in marketing, by August 2013, around Raksha Bandhan, demand picked up. They started getting 60-65 orders a day.

When Nykaa participated in the second edition of the Google Online Shopping Festival in December that year, that number shot up to approximately 1,000 orders a day.

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What makes Nykaa that it is today?

There were certain trends and models that Nayar chose not to follow. One of them being an inventory-based model over a marketplace, something most e-commerce players follow.

The second was the concept of brand-funded sales. The strategy at Nykaa was that if brands wish to discount, they pass it on to consumers. Some luxury brands do not do that and instead offer free products.

Another popular trend they did not follow was the ¡®beauty box¡¯¡ªa concept that was becoming popular not only in India, but also the US. Customers subscribe to these, and every month, the company sends four to five beauty products. After sampling them, the customers decide to buy it. Nykaa decided not to launch beauty boxes.

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The company¡¯s revenue model works majorly on the margins it earns by selling every product. Once a brand is a part of the platform, complete end-to-end marketing, including digital ads, influencer marketing, educational content creation, is done by Nykaa.

Based on the kind of deal it has with each brand, Nykaa gets a margin for every product sold on the platform, which covers all costs¡ªstorage, overheads and shipping.

The turning point

Nayar has been the talk of town since the company¡¯s blockbuster initial public offering (IPO) on November 10, 2021. The unicorn made a debut at the stock exchange on 10 November 2021, and its market capitalisation crossed INR 1 lakh crore in early deals.

According to an Economic Times report, ¡°The Nykaa shares listed with a huge premium of over 79 percent against the issue price of Rs 1,125 on Wednesday. The stock debuted at Rs 2,001, reflecting a jump of 77.86 percent on the BSE (Bombay Stock Exchange).

It then zoomed 89.24 percent to Rs 2,129. On NSE (National Stock Exchange), it listed at Rs 2,018, a premium of 79.37 percent.¡± In the latter half of the day, the closing price of Nykaa¡¯s shares was recorded at Rs 2,205.80 and Rs 2206.70 on NSE and BSE, respectively.

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By 2015, Nykaa launched its beauty brand, with products in areas where it saw certain market gaps in terms of price points. After nail enamels, lipsticks, kajal sticks and body mists in beauty, Nayar in 2017 took the plunge into a new segment: Fashion.

By the year 2022, Nykaa has various physical stores, five own brands, and even Nykaa Network, which is an interactive beauty platform.

Nayar, managing director and CEO of Nykaa, owns more than half of the beauty e-commerce business along with her husband Sanjay Nayar ¡ª India CEO of US private equity giant KKR ¡ª and their twin children: Anchit and Adwaita.

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