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Tuesday, May 17, 2011

Yash Birla buys out partner in spa business, plots expansion

This story first appeared in DNA Money edition on Tuesday, May 17, 2011.

The Yash Birla Group (YBG) has acquired another 48% stake in its health and wellness business venture — Birla Kerala Vaidyashala (BKV). The stake was bought from its joint venture partner, Kurup family, which is now left with 1% in the entity while the rest is with YBG.

N Venkat, CEO & MD, Birla Wellness, said that the group wanted full control and run the show itself hence the move to acquire JV partner’s stake. “It is a cashless deal wherein some of the assets in Kerala have been transferred to the joint venture partner in lieu of their 48% stake,” said Venkat.

Set up in 2008, BKV operates around 40 ayurvedic spa centres across key cities in India. A privately held company with an annual turnover of around `10 crore, BKV has largely focused on domestic presence in the last three years. However now that YBG has assumed full control over the business, the management is looking to take the BKV brand overseas and will soon launch ayurvedic medspa centres in UAE, Gulf region, Southeast Asia.

“We will start with our own centre and adopt the management franchise strategy for expanding presence in the international markets. The overseas centres will be established through a mix of standalone outlets as well as those housed in hotels. Our first centre will be launched in UAE within the next seven months,” said Venkat.

While the initial plan will be to have three to four centres, it will set up close to 20 international centres over the next three years. On the domestic front, YBG will expand the healthcare arm through franchise route taking the brand out of the key Indian metros Mumbai, Chennai, Bangalore & Kerala. In all, the management is looking to have 100 centres across India and international markets.

YBG will tie up with interested parties having 800 to 1,000 sq ft of space, which can go up to 4,000 sq ft depending on the demand to set up franchisees. “Assuming that the real estate will be on long-term lease basis, the franchisee partner will have to invest anything between Rs7 lakh and Rs15 lakh for a centre. Each centre should take 18 to 24 months to break even,” said Venkat.

The Rs 3,000 crore YBG has presence in sectors including auto and engineering, textiles and chemicals and, power and electricals, wellness and lifestyle, education and IT. It has nine listed entities.

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