Glamorous. That’s the word that leaps to mind when Vandana Luthra walks into the room. A regular at Delhi’s select A-list events, she’s the perfect representative of the industry she’s in. She understands what makes it tick: vanity.

“I know what you can do to make those dark circles vanish,” she tells me, flashing her trademark high-wattage smile. “I can fix it.” So can I, I tell her wryly. I’ve taken a red-eye to Delhi, so a few hours of sleep will do the trick. Not that she’s interested in that kind of commonsense reply. After all, her business has been built on supplying unguents to people who want dark circles, double chins, excess weight, and other such issues to disappear with no effort on their part.

While she panders to this need, she herself doesn’t buy into it. Rather than swallow weight-loss powders, she’s an obsessive gymmer. She had once not been able to take a phone call from me, and later told me she had taken a late-night flight from Dubai; she says she reached home at 4 am. That didn’t deter her from hitting the gym at 11 am, which was when I called.

Shahnaz Husain: Noboby else can understand how to look after your child with all its strengths and weaknesses. 
Shahnaz Husain: Noboby else can understand how to look after your child with all its strengths and weaknesses. 

She didn’t start off like this. From a Delhi middle-class family, Luthra had visited Germany a few times because her father’s work took him to that country. She once told a reporter that she came across a holistic health centre in Germany, and ever since had dreamt of creating something similar in India.

Married when she was 21, Luthra travelled again to Germany to study the health and beauty industry, but did nothing for a few years, opting to be the quintessential Indian wife, mother, and homemaker.

In 1989, she decided to put her training into practice. With a Rs 50,000 loan from State Bank of India, and a few more thousands from her husband, she opened her first salon in a basement in South Delhi’s Safdarjung Enclave. She called it Curls and Curves, which she changed five years later to Vandana Luthra Curls and Curves. She didn’t like the association of her name with the business, so changed the name again to VLCC in 1994, which has remained since.

Those were the early years of weight-loss-cum-beauty centres in India. Readers of a particular generation may remember the newspapers full of ‘before-after’ advertisements, touting neighbourhood slimming centres. The high-tech centres generally strapped customers into strange devices that would then vibrate at high intensity. A few threw in a short steam or sauna treatments to sweat some weight off. And that was it. These mom-and-pop “fitness centres” did brisk business, but there was a definite market for something way more scientific. Enter Luthra.

With her spiel of “holistic beauty” and her range of treatments and products, Luthra was exactly what the market needed. From that single basement salon 30 years ago, VLCC has grown to 129 company-owned centres, 75 franchisees, 39 self-operated vocational institutes, 34 jointly run institutes, and a factory. Oh, and centres in Malaysia, Singapore, West Asia, and Kenya.

Revenues are at Rs 800 crore, and growing year on year. But profits are a different story; the margins of Rs 20 crore are already shrinking as customers move away from the ever-so-slightly-frumpish VLCC to the more modern, international chains, or to home-grown, high-end brands like Kama or Forest Essentials.

Luthra understands it. “The customer is more aware today than ever before,” she tells me. And she knows what she’ll have to do to attract the new breed of customer: modernise, modernise, modernise. Which, on a shrinking profit margin, isn’t going to be easy. Of course Luthra can just coast along, getting ever-smaller profits from non-metros. Or she can go public, raise serious money, and pump that in to reinvigorate the brand.

There’s been talk of VLCC going public for at least two years now, but little was done before this, since Luthra believed the market was not ready. In 2015, VLCC filed a draft red-herring prospectus with market regulator Securities and Exchange Board of India (Sebi) to float an initial public offering (IPO).

The IPO is intended to raise Rs 400 crore; the proceeds are intended to fund domestic and overseas expansion as well as probably offer an exit to its big private equity investor, Everstone Capital Management.

Luthra seems clear about how she’s going to get VLCC’s mojo back. She has hired professionals from various industries to run the show. But here’s what she may not have really considered: Going public means giving up significant control of the company she built and nurtured all these years. Managing partner of consultancy firm Counselage India, Suhel Seth, says of Luthra: “Her DNA is passion for the business and compassion for her people,” both of which may be impossible to give up.

Ask Shahnaz Husain, the one who started the whole beauty business in India, if she ever considered going public during the prime of her career and she has a definite answer: “Never”. She elaborates that no one but herself could have understood how to look after her child or understand its strengths and weaknesses. “Besides, we had enough accruals from our sales and our franchise model ... we didn’t need external capital,” she adds pragmatically. Husain also points to the fact that going public means, at some level, becoming a global company, and that means operations and marketing should be at an international level, which is easier said than done.

Giving up control (and whether Luthra can do it) is the common refrain when I ask people connected with the industry to comment on the forthcoming maiden offer. Member of Parliament Shabana Azmi, who has known Luthra for a while and has been on the VLCC board as independent board member for some years, says Luthra will “have to give up control at certain levels” if she wants to take VLCC to the next level.

I realise that most people believe that Luthra will not cede control easily. Her husband, Mukesh, tells me a story that highlights this. The couple was in Paris recently, when Luthra got a phone call from a distraught junior salon employee. “She was on the phone for over half an hour on an international call. Honestly, she didn’t need to be, for something that was not mission critical or involving an executive decision. But that’s her.”

Seth adds to that, saying: “She’s deeply compassionate and it’s almost a management style that pervades her company.” And Azmi says that for Luthra, the essence of management is to connect with all employees, no matter how low on the hierarchy. “She will know her employees’ private problems, things like whose daughter is sick, and so on”.

Luthra actually tries to remember the name of every employee, and often walks in unannounced into VLCC centres to have candid chats with employees and interact with clients to get feedback.

Interestingly, this style of management is seen as something Indian companies specialise in. Last year, at Fortune India’s first Most Powerful Women debate in Mumbai, heads of companies such as AZB & Partners and Multiples Alternate Asset Management spoke of taking an interest in their employees’ personal lives, because that helps knit the team together and also allows the boss to resolve problems that could potentially affect work. In fact, Zia Mody, co-founder of AZB & Partners, has been known to take junior lawyers to task for smoking and affecting their health! That seems to be the Luthra style as well.

Will this “caring” (Luthra calls it maternal) style work once the company goes public? More important, will it allow Luthra to step away from her company and allow the professionals she has hired to run it?

A few months ago, Luthra hired turnaround whiz Syed Safawi (who has had stints heading Coke India, Reliance Communications, and Airtel) to corporatise VLCC and pull off a successful listing. Safawi recalls his first formal meeting with Luthra and her husband at the Oberoi Hotel’s Belvedere Club in Gurgaon.

It was an hour-long meeting, he remembers, and the highlight of the conversation was something Luthra told him: “[This company] has to be treated like your own child. As clichéd as it sounds, that’s what it is to us.”

Safawi was equally straightforward with them, he says. “If you’re handing it [VLCC] over to me, then you have to back off completely, let me make my mistakes and figure out how this organisation ticks.” He says he even told them: “You can put my neck on the chopping block later but let me work this out on my own.” Luthra agreed, and, he says, the couple has kept the pact. On her part, Luthra sees Safawi as the perfect fit. “He’s not overbearing, and can deal gently with people and that’s key in our business,” she says.

Apart from Safawi, who brought in a small team, Luthra hired people such as Meenakshi Vajpai, who was earlier with PVR and then Airtel; and Prashant Verma from Unilever. She even got McKinsey on board to chalk out a five-year roadmap for the group.

Clearly, she wants this to succeed. As she told Safawi during their first meeting, she wants to make VLCC a billion-dollar company, and to “do it the right way and take the hard calls”.

Shabana Azmi: To take VLCC to the next level she will have to give up some control.
Shabana Azmi: To take VLCC to the next level she will have to give up some control.

It’s about the legacy, not just money, though that’s important. Luthra is gung-ho about the prospects of the IPO, but is also realistic about where she sees the industry going. VLCC made its mark as a “slimming” or “weight-loss” company years ago. Today, that’s an anachronism. People, at least in the urban centres, don’t want to be strapped up in a vibrating belt that will shake a few calories off. Weight-loss pills and serums have been widely panned. At the same time, obesity is getting to be a global problem, the fitness centres are seeing brisk business, whether they are the nameless street-corner affairs or spas at upmarket hotels. With her focus on holistic health, Luthra should be in a sweet spot.

Except, she isn’t. To understand why, a look at the business of salons will help. Beauty salons are categorised as A, B, and C class, with C catering to the masses. Products from Shahnaz Husain or Luthra at best make it to the B-class salons. While that’s where there’s mass demand, it’s not where the money is going.

Customers want the service quality they have perhaps experienced abroad; we are talking Cidesco certification. Cidesco, established in 1946 in Switzerland, is the global benchmark for diplomas, courses, and accreditation in the beauty industry, and is so revered that most five-star hotels actually send employees to get qualified there. Luthra needs her centres to be similarly certified; right now, she has just one Cidesco-certified centre.

Then, Safawi says VLCC is going to get into the business of offering customers nutritional products and healthy lifestyle regimens. And that means large premises, modern equipment, and other incidental expenses. The answer is in the money, hence the IPO.

Devangshu Datta, CEO of Third Eyesight market research, says the problem with entrepreneur-led companies is that the founder invariably loses steam after a couple of decades running the business. It requires external forces to keep the momentum going. And that’s what the VLCC IPO could do.

The trouble seems to be that too much hinges on a successful offer. Given the state of the market, that seems a gamble. Meanwhile, globally, corporations are ditching the lure of the capital markets to stay private; others are de-listing and going back to being private. In the U.S., the list of companies that have remained private or de-listed includes Uber, Koch Industries, Mars, Cargill, and Dell. In most cases, owners do not want to be answerable to regulators and activist investors. Back home, the drivers are different, and entrepreneurs still believe going public is the most effective way to raise funds.

Pranav Haldea, managing director of Delhi-based Prime Database, doesn’t want to talk about the prospects of any particular IPO. Rather, he points to the trend in the last 12 months, where 80% of IPOs have been to dilute promoter stake and pay investors. “Most investors don’t care if it’s a pharma company or an axle manufacturer. They look at the management teams, the fundamentals of the company, and the finances,” he says.

THE VLCC EXPERIENCE: From the time she started, Luthra has promised “holistic beauty” treatments.
THE VLCC EXPERIENCE: From the time she started, Luthra has promised “holistic beauty” treatments.

That said, if the IPO is a success and VLCC does raise the necessary money to help it upgrade, Luthra could be set for a new lease of life as a businessperson. For now, though, she’s talking seriously of at least sharing control.

Running this business has never been easy, says Luthra, recalling how in the early days she was often disdainfully called a “parlour-waali”. She tells me how she once set up a salon, and the Delhi Metro built a station exit right in front of it. Traffic and footfalls fell drastically, she says, but she still had to pay the staff and shop rent.

Another time, a neighbouring building was being renovated, and she had to halt massage therapies until the drilling and hammering ceased. All of which had an impact on revenue. Many of these problems she has learnt to tackle on her own, but she knows listing is a different animal, and she can’t manage that on her own.

Therefore, the free rein to Safawi and his team, and the deliberate distancing of herself from the company. Even though she still sees herself as a “mother figure” in the organisation, the reality is that she’s going to allow Safawi to do his work. So when he lets go of a non-performing employee who has been with the company for decades, she can’t jump in anymore. (And those international calls when she’s travelling will also probably stop.)

There are other instances where Luthra is starting to relinquish control. Hiring based on maternal instinct or on how well the promoters get along with the employee is a thing of the past, Safawi says. He’s not saying he

won’t hire employees vetted by the owners but that’s only if they clear an assessment programme.

Safawi is also clear that employees will have to learn to manage a customer life cycle using technology as an enabler, and not neighbourhood bonhomie. What that means is a salon manager will have to learn how to keep an eye on when a customer is due for a haircut or a manicure based on a program that tracks previous visits, and not just depend on small talk made when the customer visits the salon.

Seth says that modernising and revitalising the salons business is all good, but he has another plan in mind for Luthra. He says that an area she should be capitalising on is the digital marketing space. Given her rapport with people, she should actually run a channel on YouTube showing people how to live healthier lifestyles, the VLCC way, says Seth.

Perhaps diversification is on the cards at some future date. In fact, reports say Luthra recently invested an undisclosed amount in an online grocery startup, Smartcooky, an NDTV venture.

For now, Luthra is learning how to let go. Seeing her plans to fruition will fulfil a deep-seated professional and personal desire, she says: to create an institution. “My brand will not die after I’m gone,” she says firmly.