Bengaluru/Mumbai: Private equity major Lighthouse Funds is looking to exit its six-year-old bet in footwear maker Aqualite Industries, and it has already started early talks with prospective investors, two people familiar with the matter told Mint.

Lighthouse—that had invested 250 crore in 2018 from its third fund—for a minority stake (16.4%) in the company, is now looking to cash out its investment, the first person cited above said. 

“Bankers will be appointed soon, and a formal process will begin. At present, the company has held initial talks with other PE funds to gauge their interest,” the person added, requesting to remain anonymous.

Lighthouse—a leading mid-market private equity firm that typically focuses on growth investments in India’s consumer sector—includes prominent brands such as Nykaa, Bikaji Foods, Tynor Orthotics, and Fabindia, among others, in its portfolio. 

Also read: Lighthouse Funds invests 700 crore Parsons Nutritionals

It is also looking to cash out of its investment in Tynor, Mint reported on Tuesday.

Slow walking

Growth for Aqualite has been slow after the company’s performance was hit by the effects of the pandemic. 

In FY23, the company managed to clock 922 crore in revenue, up from 744 crore a year earlier, as per a report by ratings agency Crisil in September 2023. 

The report added that there could be a marginal increase in 2024, with revenues expected in the range of 950-1,000 crores, driven by the company’s shift in focus to prioritising sales in higher-margin segments.

In recent years, the company’s profitability has been under pressure due to reduced margins that have shrunk because of low bargaining power in a price-sensitive market. 

The Crisil report highlighted that Aqualite has been unable to pass on the increase in prices of raw materials to customers, even as it faces intense competition from unorganized players and other established brands.

Its operating margin, which was a dismal 0.2% in FY22 and even lower during the first half of FY23, has however improved in the subsequent quarters. The company reported operating margins of 10.6% for FY23 as it benefited from price increases to offset rising input costs, the Crisil report noted. 

Queries emailed to Lighthouse and Aqualite did not elicit any response till the time of publishing.

The report further noted that an increase in the sales of its higher margin segments, which include non-Hawaii items and shoes, coupled with a rise in export orders, has helped improved the company’s financials.

A branded opportunity

Aqualite’s origins go back to 1981 when managing director Davinder Gupta, a first-generation entrepreneur, started the company with a mission to make lightweight footwear for farmers near Delhi. 

As more Indians gravitated towards style and fashion post the liberalisation wave in the 1990s and beyond, the company expanded its offerings to cater to the needs of the middle class and other segments.

Also read: Lighthouse buys stake in Aqualite Industries for 250 crore

The company today offers more than 6,500 products and has manufacturing units in Haryana and Rajasthan, with a pan-India distribution network of about 35,000 retailers. It claims to have a significant presence in north and east India.

As per a recent report from market intelligence platform Statista, India’s footwear market generated reveues of $26.06 billion in 2024. 

“It is expected that the market will grow annually by 4.85% (CAGR 2024-2028). In relation to the total population figures, it is expected that per person revenues of $18.20 will be generated in the footwear market in India in 2024. The market volume is expected to amount to 2,226 million pairs by 2028, with a volume growth of 0.4% expected in 2025,” the report stated.



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