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Explained Simply For Kids & Teens

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Mamaearth: From Innovation to IPO

Written by Prakriti Panwar, a first-year undergraduate student

Mamaearth is an Indian toxin-free, natural, plant-based beauty, skin-care, and grooming brand which was established in 2016 by husband-wife duo Varun and Ghazal Alagh.

By I Kid You Not , in Explained Facts to Know , at July 5, 2022 Tags: ,

Written by Prakriti Panwar, a first-year undergraduate student

The startup story

What it is..

Mamaearth is an Indian toxin-free, natural, plant-based beauty, skin-care, and grooming brand which was established in 2016 by husband-wife duo Varun and Ghazal Alagh.

The brand aims to establish itself as “every parent’s best friend” and aspires to take care of each parent and child’s well-being through its toxin-free products. It is established under the parent company Honasa Consumer Pvt Ltd.

Its amazing story

Mamaearth began when Ghazal and Varun Alagh were expecting their first child.  While they were researching baby products at the time, they realized that most products contained harmful toxins. That is when they decided to create a brand “for parents and by parents” to provide safe products to all.

Today, it is considered to be one of India’s fastest-growing D2C (direct to consumer) brands. The company is considered an AFMCG (automatically fast-moving consumer goods). FMCG (fast-moving consumer goods) refers to products that “sell out quickly and at a lower cost.” Some examples are cosmetics (such as Mamaearth products) and processed foods (like chips and biscuits).

How does it make money?

Mamaearth has a unique yet simple business model that has greatly contributed to its growth over the years. The model includes everything from good quality products, lean innovation cycles (which mean continuously listening to consumer feedback), advertisements, social media marketing, and influencer marketing.

For instance, after Indian actress Shilpa Shetty was named the brand ambassador for Mamearth, the company’s sales increased up to 4 times. In the same year, i.e. 2018-19, Mamearth generated a revenue of Rs 25 Cr and crossed Rs 100 Cr the next year.

The online benefit

90% of Mamaearth’s sales come from online platforms such as Flipkart, Amazon, etc. Though Mamaearth started out as a brand focusing on safe baby products, only 20% of its revenue comes from baby products, while the other 80% comes from haircare and skincare products.

The company is currently planning to raise $300 million in a planned IPO (Initial Public Offering) in 2023.

What does this mean?

IPO basically means when a company raises funds by selling stocks and shares to the public.

When an IPO is released, it is the first time the company offers these shares and stocks to the public (which includes common people like you and me)  to raise funds for various reasons ranging from growth to paying debts.

IPOs are issued through investment banks. Based on the value of the company, the company and the investment bank establish the IPO price, shares, and also the percentage of ownership the company will give up.

When an IPO takes place, it means that a private company is now being converted into a public one. When a company is private, only a few investors own it but when it becomes public, the company can be owned by a large number of common people who buy this company’s shares.

In the case of Mamaearth, the company seeks a valuation of $3 billion(which means it feels that its estimated economic value is worth $3 billion.) And through the IPO, Mamaearth aims to raise $300 million.

Why is this a big deal for Mamearth?

Because going public by releasing an IPO means that the company can raise a lot of money now, which in turn will rapidly facilitate its growth. Many stock exchanges even organize a ceremony to mark the release of an IPO. For instance, in the New York and London Stock exchanges, a bell is rung to celebrate.

If the IPO release next year is successful, then Mamaearth will grow by leaps and bounds. The IPO will not only result in greater funding but will also result in other advantages such as an enhanced public image and the ability to hire more (and better) employees.

Headline Image: https://mamaearth.in/

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