Setting the record straight: How Mamaearth dealt with its IPO controversy

After Honasa Consumer, the parent company of Mamaearth, filed its Draft Red Herring Prospectus with Sebi at the end of 2022, Ghazal and Varun Alagh decided to take some time off. The husband and wife duo, who are also co-founders of Mamaearth, were bone-tired from the intense work and wanted to bring in the new year with their children. Everything had gone well, and it was time to celebrate. Except that they couldn’t.

“January (2023) was a blur,” recalls Ghazal, the exhaustion of that day clearly visible on her face. 

After Honasa filed its DRHP, news reports said the company was expecting to IPO at a $3 billion valuation. The number wasn’t mentioned in the document, and the Alaghs say they hadn’t mentioned it at all. 

That did not stop it from getting widely reported, and it was splashed all over social media. There were countless Twitter threads questioning what was seen as a very high valuation. From “unreal” to “screw this IPO,” Twitter threads to LinkedIn posts, the news was everywhere. And that is what the Alaghs woke up on the first day of the year. 

Silent period

There was damage control to do, but the Alaghs didn’t know where to start. Varun and Ghazal went to work, but there was little they could do. They had been advised of a “silent period” post-filing DRHP, where companies avoid discussing anything about the business or future plans. 

“We took it very seriously. So that rumour (about valuation) got taken as it might be true. That was our mistake and we own it,” she says. 

Both she and Varun put out LinkedIn posts, saying they don’t quantify the valuation number, but the damage was already done. The reports kept on coming, and the questions kept piling on. “It was a miss, and the blur took some time to clear, and more speculations kept piling on top of the valuation reports,” she concedes. 

One such speculation surfaced in March when it was widely reported that Honasa had put its IPO on hold. Ghazal and Varun were quick to respond this time and denied the rumours. 

Building responsibly 

Going public, says Ghazal, is a part of the journey when building a brand and a strong business, and it is not just about valuation alone. “We are a profit-making company, and there should be an understanding that there have to be more reasons than just money for us to decide to go public,” she adds.

Mamaearth turned profitable in the financial year 2022, and the parent company Honasa has a total of six brands under its umbrella today. 

The passion to build has only become stronger for the couple over the years. They acknowledge the love and respect that has come their way for building a responsible brand from scratch. 

“It is our responsibility to share what we have built, what we have learnt, with people. We share that actively too. But because of the process (post-DRHP), we were quiet for a while,” says Ghazal. It is a gap, she adds, that they are actively working to fill through conversations within the industry and outside of it.

For both Varun and Ghazal, it seems amply clear that Mamaearth is not just a business. It is their labour of love that has transformed into a company. They call Mamaearth their third child after their two sons. And the IPO controversy affected them the way an unfavourable report about their child would.  

“It really hurts,” Ghazal says, the pain visible in her eyes. “We have built this brand with a lot of hard work and love,” she adds. 

There is also a desire to nurture the future generation of entrepreneurs. Ghazal was briefly a judge on Shark Tank India where she invested in a few companies and has wise words for the future founders.

It is important to pay attention to the small details and continue the actions you take as a young company, even after you scale. “This is the mindset with which we’re building Mamaearth. Our product launches, quality, processes, the way we grow our business, these small things make a larger business goal, which will take the Indian opportunity to the world,” she says.

It is difficult to disagree. 

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