Case Study on Lotus Herbals

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From an exportfocused business, Lotus Herbals has grown into a significant beauty brand in the domestic market Shuchi Vyas

TWELVE years ago, when Kamal Passi started Lotus Herbals, the beauty market in India was still in its most vestigial stage; what went in the name of beauty products was an assortment of bleaches, cold creams and fairness creams, and a handful of colour cosmetics. And Ayurveda hadn’t quite emerged as the magical master key to beauty either. It’s only natural then that Passi chose to cater to the overseas market, positioning Lotus’ portfolio of skin-, body-, hair-care and sun-protection products on the ‘contemporary Ayurvedic beauty’ plank. Twelve years later, the wheel has come full circle for the Delhibased company. Buoyed by the dramatic surge in the Indian beauty market, Lotus has shifted priorities, choosing to focus increasingly on the domestic market. “We realised the potential in the Indian market three years ago and started activation last year,” says Nitin Passi, director, marketing and sales, Lotus Herbals. “This year, we are likely to see 50% of our turnover coming from the domestic market.” In fact, the Indian market accounted for 45% of the company’s Rs 70-croreplus turnover in 2005 — the remaining 55% was a mix of Lotus’ export business and its contract manufacturing deals with overseas companies. It’s not just the boom in the Indian beauty market that’s acted as a catalyst for Lotus — a steady decline in growth of the export business has played a part too. Passi reveals that growth from the export and contract manufacturing businesses has dropped to just 10% and 15%, respectively (from a CAGR of 30-40% four years ago), on account of the gradual saturation of developed markets like the US and Italy. Lotus Herbals began operations by exporting to West Asia and the US in partnership with Prestige Household Products, an India-based trading organisation — in its initial years, Prestige also served as seed capitalist for Lotus....
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