Mankind Acquires Majority Stake In D2C Startup Upakarma Ayurveda

Pharmaceutical major Mankind has picked up a majority stake in D2C health and wellness brand Upakarma Ayurveda through one of its subsidiaries.

There is no clarity yet on the financial contours and stake share details of the transaction..

The deal will enable Mankind Pharma to ramp up its presence in the Ayurvedic wellness category and expand its portfolio of products. On the other hand, the transaction will also allow Upakarma Ayurveda to leverage Mankind Pharma’s strong distribution network and in-house capabilities.

“As Mankind Pharma works towards improving the healthcare of people, we have associated with Upakarma Ayurveda in order to cater to the emerging needs of consumers,” said Mankind Pharma vice-chairman and managing director Rajeev Juneja.

Echoing the sentiment, Upakarma Ayurveda managing director and cofounder Vishal Kaushik said, “There has been a rising consciousness around Ayurveda in recent years. We, at Upakarma Ayurveda, have been building a connection with our consumers, and now with this partnership, the team is elated and is looking forward to widening our reach with Mankind Pharma backing us.”

Founded in 2017 by brothers Vishal Kaushik and Parag Kaushik, Upakarma Ayurveda began as a brand that largely sold shilajit and saffron, but, has since expanded quickly to add more products.

The startup has so far raised $1 Mn from multiple investors. 

As per the latest estimates, Upakarma has more than 36 SKUs and reported a revenue of INR 11.74 Cr in the financial year 2020-21 (FY21). With global operations currently in the US and UAE, the startup sources raw materials directly from farmers and delivers them to customers’ doorsteps. 

The startup competes directly with the likes of D2C startups such as NirogStreet, Amrutam, Aadar and Kapiva as well as conglomerates such as Dabur, Patanjali, Baidyanath, Dr. Vaidyas and Himalaya. 

D2C Space Hits A Wall

The announcement comes at a time when the D2C space appears to be undergoing a major churn. After a bumper 2021 when ecommerce startups raised $10.6 Bn in funding, the industry has hit a major slump in 2022. In comparison, ecommerce startups raised a mere $3.1 Bn in the first six months of the current year.

The growth momentum has hit a wall in the country owing to saturated metros and Tier 1 cities and rising logistics costs. Then there has been a growing wave of consolidation, which has seen big conglomerates pick up stakes in small D2C startups. Not just this, but not enough knowledge about how to scale up via the omnichannel route has not played well for these D2C players.

The current year has seen consumer goods major Marico pick up a 53.98% stake in D2C healthy foods brand True Elements and another FMCG major Emami acquiring a 19% equity stake in nutrition-focused D2C FMCG startup TruNativ.

However, in terms of absolute numbers, India is home to more than 50,000+ digital brands. Led by pandemic growth, increasing internet penetration and rising disposable income, the Indian D2C market is projected to reach a size of $100 Bn by 2025.

Meanwhile, Mankind Pharma has pulled all stops as it looks to go ahead with its initial public offering (IPO). The announcement comes right after Mankind filed its draft red herring prospectus (DRHP) with market regulator SEBI to raise $700 Mn through a public listing.

While the D2C growth momentum has come to a screeching halt amidst a global downturn, the current times could see sustainable players emerge. With a renewed focus on the product specifics and unit economics, it remains to be seen how quickly the space tides over the current hiccup.