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Spa industry

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This document provides an overview of the spa industry in India. It discusses the history and growth of spas, describing them as a highly fragmented industry with few national brands. The key trends highlighted include the entry of foreign players, growth in medical spas, and increasing affordability and popularity among new customer segments like teens and men. Competitors are largely local or hotel brands, though international firms are expanding. The industry is projected to experience continued rapid growth in the coming years.

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DISCLAIMER This document is for the personal information of the authorized recipient and makes an attempt to provide the end user with necessary information & act as a guiding force in undertaking the project this document details about. Devenio Optimus Advisors is not soliciting any invitation to subscribe to any security or investment in any project based on this document. This Document does not purport to be all-inclusive or contain all the information that a prospective investor, lender, partner or interested party requires for their review of this Company.Company. Neither Devenio Optimus Advisors Private Limited nor any of its directors, officers, or advisers give any representation or warranty, express or implied, in relation to the accuracy or completeness of the information contained herein. No responsibility is accepted for the accuracy or sufficiency of any of the i f ti i i i t d d li bilit f di t i di t ti l linformation or opinions communicated and any liability for any direct, indirect or consequential loss or damage suffered by any person arising there from is expressly disclaimed. The recipient of this document is cautioned that any forward looking statement/projection are prediction and are subject to change. Devenio Optimus Advisors will not accept not would be responsible for anyj g p p p y liability arising from use of this document. Devenio Optimus Advisors Pvt Ltd 息 2010 Private & Confidential
INTRODUCTION The Wellness Industry in India have been growing exponentially over the last couple of years. The fast moving lifestyle full of stress has resulted into booming business for those involved in providing relaxation and rejuvenation therapy. Spas in India are a highly fragmented industry. Apart from a few Spas which operate as a chain across multi location. Spas in India are generally standalone. Due to this there are hardly any Spa brand which is recognizable on a pan India basis. The lack of quality standards are also a concern. Although not amongst its core activities but due to the problems plaguing the industry major hotels run there own Spas. The sudden boom in Spas is changing the industry scenario. The Wellness Industry is witnessing rapid changes, established corporate like the Birla group are foraying into the industry and so are well known international brands. The sudden growth in Spas have made them affordable to the huge upper middle class providing a large captive market. Along with it medical tourism as a sector has been booming & is giving riseproviding a large captive market. Along with it medical tourism as a sector has been booming & is giving rise to strong demand for Wellness therapies. Devenio Optimus Advisors Pvt Ltd 息 2010 Private & Confidential
HISTORY What is a spa? The ancient concept of a spa (literally, sanitus per aqua in Latin or mineral spring) revolves around the therapeutic powers of water fortified with the powers of minerals (primarily zinc, magnesium and iron). Spas are the most frequented and sought-after destination, thanks to the feel-good factor they engender. Mineral springs in ancient times were renowned for their therapeutic values, especially in Rome where hundreds of Roman baths did double duty as bath houses and health centres. O ti t d d ti h d d th i h l t dOver time, resorts and accommodation mushroomed around these springs where people congregated. However, at this stage these spas were still strictly therapeutic. Gradually, more and more people started thronging these spas to tackle stress and lifestyle-related disorders. Where there were no natural springs, canny entrepreneurs built mind-body rejuvenation centres andp g , y p y j fitted them with modern gadgets. And voila! the modern spa was born. Today, many good salons across the world offer a day spa facility with or without wet services (Jacuzzi-sauna-steam) as people are scrunched for time to visit a real spa. Here, they can detox, de- stress and rejuvenate themselves without bothering to leave townstress and rejuvenate themselves without bothering to leave town Devenio Optimus Advisors Pvt Ltd 息 2010 Private & Confidential
THE INDUSTRY Globally the wellness industry is estimated at over $250 billion. There are about 75,000 standard spas world over that provide direct employment to about 1.5 million people As per FICCI-E&Y report in 2009, Spa Industry forms a significant part of the Rs 11,000 crores wellness services sector in India In India, there are over 2300 spas that have created direct and indirect employment for about 400,000 lpeople. The rise in the annual disposable income couples with high level of well being and growing level of health awareness has created strong opportunities for existing and new players in the market . In the next four years, 700 new spas, both homegrown and international brands, will open in India to meet the growing demand. The spa industry has observed strong growth and expected to grow dynamically in the future. The Spa & body treatment segment is still in an infant state in India, the industry projections suggest this segment to be worth Rs 4,000 crores over next four to six years. Devenio Optimus Advisors Pvt Ltd 息 2010 Private & Confidential
PORTERS 5 FORCES Threat of New Entrants VERY HIGH Vi t ll t b i A f Bargaining power of Buyers MEDIUM Although its a high growth industry with stiff competition within rival firm there is no uniformity in d t i i O t i th ff iVirtually no entry barriers. Any person can foray into the business without complications product or pricing. Operators price the offerings as per the package. Hence the end user has limited bargaining power when it comes to pricing or bundling in of additional services. Rivalry within the Industry HIGHRivalry within the Industry HIGH Largely localized & unorganized market. Hardly any player with Pan India presence and operating with a corporate structure. The industry is fragmented & due to limited or no brand recall / value , competition amongst firm in the Industry is very stiff and at a local Bargaining power of Suppliers HIGH Threat of Substitute VERY LOW There is a very low threat from substitute products, Th t t d h i d th d t firm in the Industry is very stiff and at a local level. Currently very few suppliers of trained manpower or products. These suppliers enjoy a relatively commanding bargaining power The automated massage chairs and other products available in the market do not in the real sense offer any threat, as it cannot parallel or replicate the Spa experience. Devenio Optimus Advisors Pvt Ltd 息 2010 Private & Confidential
TYPES OF SPA Resort Spa Day Spa Prevalent in large hotels, provides body treatments & aromatic rubs y p Small Setup, Provides facial, pedicure, manicure & massages Types of Spa aromatic rubs massages Medical Spa Setup across the Destination Spa Setup in remotep country & is into hydrotherapy & various surgical procedures Setup in remote locations & provides body treatments & aromatic rubs Devenio Optimus Advisors Pvt Ltd 息 2010 Private & Confidential
ACTIVITY SEGMENTATION Ayurveda,Yoga, Meditationy Y g Therapies aimed at relaxation of body & mind. Massage Therapy, Body & Facial Treatments For clients looking for anti-aging solutions, chronic pain etc Alternative Health Care Use massage as a preventive healthcare treatment, helpg p , p reduce stress Devenio Optimus Advisors Pvt Ltd 息 2010 Private & Confidential
KEY TRENDS F i Pl E t i Targeting Teens & Men Foreign Players Entering the Market Key Trends Growth in MediSpas Increasing Affordability, No longer a luxuryNo longer a luxury Devenio Optimus Advisors Pvt Ltd 息 2010 Private & Confidential
KEY TRENDS As global players in the hospitality sector expand across Indian cities, accompanying them are the spa and body treatment firms that expect an immense growth potential in the country. Growing demand of medical spa is also noticed in the last few years. The people are more vibrant to i t i th i d l i hidd h lth t t t f t b dexperiment various message therapies, and exploring hidden healthy treatments . foot message , body message , neck and back message and other exfoliation therapies are among the most popular services. While body treatment and massage, which are integral aspects of spa, are not new for Indians as theyy g g p p y have known similar techniques from ayurveda, the very concept of spa is expected to boost the ayurveda massage segment as well. The Swedish massage, German body treatment and Thai massage are the most popular therapies across all spa centresacross all spa centres. The most targeted customers for the sector were females but with the changing trends and growing wellness and health consciousness the new targeted customers are men a segment which is registering about 80% growth annually. In India, a Spa treatment was considered to be a luxury, with the increase in disposable incomes & increase in accessibility due to the growth of Spa across the country, a Spa treatment has become affordable to the rising middle class, Devenio Optimus Advisors Pvt Ltd 息 2010 Private & Confidential
COMPETITIVE LANDSCAPE Devenio Optimus Advisors Pvt Ltd 息 2010 Private & Confidential
COMPETITIVE LANDSCAPE The Indian Spa Industry is highly fragmented with spas across the country. A few Brands like Sansha, Orient Spa, Kerala Ayurveda have a chain of outlets barring them most of the Spas in the country are single destination operative. Large hotels themselves have expanded their services to encompass spa services & Destination spasLarge hotels themselves have expanded their services to encompass spa services & Destination spas are competing for both local and foreign customers. As of now, around 70 per cent of the spa business is run by local brands, while the rest is taken over by international spa firms. The Industry is expected to witness exponential growth in the times to come & many players both domestic and international are setting up expansion plans Many standalone day and destination spas are being set-up in major cities are such majory y p g p j j establishments, its expected that nearly 700 new Spas will be added over the coming few years Being one of the biggest platform for customer orientation India has become one of the most popular destinations for the global players. International Brands like MSpa International from Thailand, Aman Resorts From Singapore & Xpress Spa from US are establishing a presence and planning to scale upResorts From Singapore & Xpress Spa from US are establishing a presence and planning to scale up. Domestic entrants are abound in the market with plans for multiple locations concentrated in tier- I and tier - II cities Devenio Optimus Advisors Pvt Ltd 息 2010 Private & Confidential
GROWTH DRIVERS With more and more multinational companies setting base in India, India is seeing an increasing number of business travelers combining business with leisure and the MICE (Meetings, Incentives, Conventions, and Events) market is growing. Women today visit beauty salons not as much to look better as to feel good and have some time forWomen today visit beauty salons not as much to look better as to feel good and have some time for them. They want to pamper themselves and are constantly on the lookout for new experiences. Traditionally Men used to visit saloons only for haircuts or a quick shave but times have changed and a average Indian male today loves to visit Spas to relax and de-stress himself. Young Men are one of the f t t i t t f th S i d tfastest growing customer segment for the Spa industry. Increase in disposable income has made Spa treatment affordable. Spa treatment is not longer a luxury services beyond the reach of an average person. A huge middle class with a ever increasing appetite for newer and better goods and services, provide Spas a large client base.g , p p g The ever so stressful life style and pressures all around have made Spa treatments to de-stress & rejuvenate a necessity for the ambitious young professionals. The truth of an Affordable Health Destination Medical wellness and cosmetic med spas is a boomingThe truth of an Affordable Health Destination - Medical wellness and cosmetic med spas is a booming business as it fills certain critical gaps in the traditional health care system. Spas tie in with medical tourism as part of the post-op recuperative holiday. Devenio Optimus Advisors Pvt Ltd 息 2010 Private & Confidential
CHALLENGES The Spa industry is highly fragmented & unregulated. Lack of standardization. There is no regulatory body which ensure that a certain quality standard are maintained across the Industry. Every Spa in India does the same Traditional Treatments differently, simple therapy like Ayurvedic Massage is done in different manner in different places, for example, Shirodhara is done at any time of the day, where as it is strictly contra indicated in the afternoons. L k f dit d t i i i tit t D t hi h t i d i t il il bl HLack of accredited training institutes. Due to which trained manpower is not easily available. Human resources are at premium in the Industry. Lack of Government support in promotion of industry except in few cases Shady places working under the name of Massage joints giving a bad name to the profession & Industry. Devenio Optimus Advisors Pvt Ltd 息 2010 Private & Confidential
FINANCIAL OVERVIEW A Spa with 3 therapy rooms & 3 foot massage chair will require an area of 1500-1800 Sq ft. Capex on Per Sq ft basis (More lavish you make more will you spend) `. 2000 & above Capacity Utilisation for a Spa is around 50-60%p y p % Average Cost for a body therapy `. 2000 Average Cost for a Foot therapy `. 500 For a 1500 Sq Ft Spa@ 55% UtilisationFor a 1500 Sq. Ft Spa@ 55% Utilisation Revenue generated per Sq Ft. `. 7,623 Cost per Sq. Ft `. 5,533 EBITDA per Sq. Ft `. 2,090 EBITDA % 27%EBITDA % 27% Cost Structure Employee Cost 30% Rent 36% Source: DO Research Rent 36% Electricity & Water 6% Consumables & Other Cost 23% Marketing & Publicity 5% Devenio Optimus Advisors Pvt Ltd 息 2010 Private & Confidential
2nd Floor Devenio Optimus Advisors Pvt. Ltd. No 5022nd Floor, 27, Babar Road New Delhi 110 001 Tel : +9111 4151 0900 Fax : +9111 4151 1140 No.502, Shah Sultan Complex, Cunningham Road Bangalore 560 052 Email : contact@devenio.in Mergers & Acquisition Private Equity Placements Debt Placements Transaction advisory Devenio Optimus Advisors Pvt Ltd 息 2010 Private & Confidential

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Spa industry

  • 2. DISCLAIMER This document is for the personal information of the authorized recipient and makes an attempt to provide the end user with necessary information & act as a guiding force in undertaking the project this document details about. Devenio Optimus Advisors is not soliciting any invitation to subscribe to any security or investment in any project based on this document. This Document does not purport to be all-inclusive or contain all the information that a prospective investor, lender, partner or interested party requires for their review of this Company.Company. Neither Devenio Optimus Advisors Private Limited nor any of its directors, officers, or advisers give any representation or warranty, express or implied, in relation to the accuracy or completeness of the information contained herein. No responsibility is accepted for the accuracy or sufficiency of any of the i f ti i i i t d d li bilit f di t i di t ti l linformation or opinions communicated and any liability for any direct, indirect or consequential loss or damage suffered by any person arising there from is expressly disclaimed. The recipient of this document is cautioned that any forward looking statement/projection are prediction and are subject to change. Devenio Optimus Advisors will not accept not would be responsible for anyj g p p p y liability arising from use of this document. Devenio Optimus Advisors Pvt Ltd 息 2010 Private & Confidential
  • 3. INTRODUCTION The Wellness Industry in India have been growing exponentially over the last couple of years. The fast moving lifestyle full of stress has resulted into booming business for those involved in providing relaxation and rejuvenation therapy. Spas in India are a highly fragmented industry. Apart from a few Spas which operate as a chain across multi location. Spas in India are generally standalone. Due to this there are hardly any Spa brand which is recognizable on a pan India basis. The lack of quality standards are also a concern. Although not amongst its core activities but due to the problems plaguing the industry major hotels run there own Spas. The sudden boom in Spas is changing the industry scenario. The Wellness Industry is witnessing rapid changes, established corporate like the Birla group are foraying into the industry and so are well known international brands. The sudden growth in Spas have made them affordable to the huge upper middle class providing a large captive market. Along with it medical tourism as a sector has been booming & is giving riseproviding a large captive market. Along with it medical tourism as a sector has been booming & is giving rise to strong demand for Wellness therapies. Devenio Optimus Advisors Pvt Ltd 息 2010 Private & Confidential
  • 4. HISTORY What is a spa? The ancient concept of a spa (literally, sanitus per aqua in Latin or mineral spring) revolves around the therapeutic powers of water fortified with the powers of minerals (primarily zinc, magnesium and iron). Spas are the most frequented and sought-after destination, thanks to the feel-good factor they engender. Mineral springs in ancient times were renowned for their therapeutic values, especially in Rome where hundreds of Roman baths did double duty as bath houses and health centres. O ti t d d ti h d d th i h l t dOver time, resorts and accommodation mushroomed around these springs where people congregated. However, at this stage these spas were still strictly therapeutic. Gradually, more and more people started thronging these spas to tackle stress and lifestyle-related disorders. Where there were no natural springs, canny entrepreneurs built mind-body rejuvenation centres andp g , y p y j fitted them with modern gadgets. And voila! the modern spa was born. Today, many good salons across the world offer a day spa facility with or without wet services (Jacuzzi-sauna-steam) as people are scrunched for time to visit a real spa. Here, they can detox, de- stress and rejuvenate themselves without bothering to leave townstress and rejuvenate themselves without bothering to leave town Devenio Optimus Advisors Pvt Ltd 息 2010 Private & Confidential
  • 5. THE INDUSTRY Globally the wellness industry is estimated at over $250 billion. There are about 75,000 standard spas world over that provide direct employment to about 1.5 million people As per FICCI-E&Y report in 2009, Spa Industry forms a significant part of the Rs 11,000 crores wellness services sector in India In India, there are over 2300 spas that have created direct and indirect employment for about 400,000 lpeople. The rise in the annual disposable income couples with high level of well being and growing level of health awareness has created strong opportunities for existing and new players in the market . In the next four years, 700 new spas, both homegrown and international brands, will open in India to meet the growing demand. The spa industry has observed strong growth and expected to grow dynamically in the future. The Spa & body treatment segment is still in an infant state in India, the industry projections suggest this segment to be worth Rs 4,000 crores over next four to six years. Devenio Optimus Advisors Pvt Ltd 息 2010 Private & Confidential
  • 6. PORTERS 5 FORCES Threat of New Entrants VERY HIGH Vi t ll t b i A f Bargaining power of Buyers MEDIUM Although its a high growth industry with stiff competition within rival firm there is no uniformity in d t i i O t i th ff iVirtually no entry barriers. Any person can foray into the business without complications product or pricing. Operators price the offerings as per the package. Hence the end user has limited bargaining power when it comes to pricing or bundling in of additional services. Rivalry within the Industry HIGHRivalry within the Industry HIGH Largely localized & unorganized market. Hardly any player with Pan India presence and operating with a corporate structure. The industry is fragmented & due to limited or no brand recall / value , competition amongst firm in the Industry is very stiff and at a local Bargaining power of Suppliers HIGH Threat of Substitute VERY LOW There is a very low threat from substitute products, Th t t d h i d th d t firm in the Industry is very stiff and at a local level. Currently very few suppliers of trained manpower or products. These suppliers enjoy a relatively commanding bargaining power The automated massage chairs and other products available in the market do not in the real sense offer any threat, as it cannot parallel or replicate the Spa experience. Devenio Optimus Advisors Pvt Ltd 息 2010 Private & Confidential
  • 7. TYPES OF SPA Resort Spa Day Spa Prevalent in large hotels, provides body treatments & aromatic rubs y p Small Setup, Provides facial, pedicure, manicure & massages Types of Spa aromatic rubs massages Medical Spa Setup across the Destination Spa Setup in remotep country & is into hydrotherapy & various surgical procedures Setup in remote locations & provides body treatments & aromatic rubs Devenio Optimus Advisors Pvt Ltd 息 2010 Private & Confidential
  • 8. ACTIVITY SEGMENTATION Ayurveda,Yoga, Meditationy Y g Therapies aimed at relaxation of body & mind. Massage Therapy, Body & Facial Treatments For clients looking for anti-aging solutions, chronic pain etc Alternative Health Care Use massage as a preventive healthcare treatment, helpg p , p reduce stress Devenio Optimus Advisors Pvt Ltd 息 2010 Private & Confidential
  • 9. KEY TRENDS F i Pl E t i Targeting Teens & Men Foreign Players Entering the Market Key Trends Growth in MediSpas Increasing Affordability, No longer a luxuryNo longer a luxury Devenio Optimus Advisors Pvt Ltd 息 2010 Private & Confidential
  • 10. KEY TRENDS As global players in the hospitality sector expand across Indian cities, accompanying them are the spa and body treatment firms that expect an immense growth potential in the country. Growing demand of medical spa is also noticed in the last few years. The people are more vibrant to i t i th i d l i hidd h lth t t t f t b dexperiment various message therapies, and exploring hidden healthy treatments . foot message , body message , neck and back message and other exfoliation therapies are among the most popular services. While body treatment and massage, which are integral aspects of spa, are not new for Indians as theyy g g p p y have known similar techniques from ayurveda, the very concept of spa is expected to boost the ayurveda massage segment as well. The Swedish massage, German body treatment and Thai massage are the most popular therapies across all spa centresacross all spa centres. The most targeted customers for the sector were females but with the changing trends and growing wellness and health consciousness the new targeted customers are men a segment which is registering about 80% growth annually. In India, a Spa treatment was considered to be a luxury, with the increase in disposable incomes & increase in accessibility due to the growth of Spa across the country, a Spa treatment has become affordable to the rising middle class, Devenio Optimus Advisors Pvt Ltd 息 2010 Private & Confidential
  • 11. COMPETITIVE LANDSCAPE Devenio Optimus Advisors Pvt Ltd 息 2010 Private & Confidential
  • 12. COMPETITIVE LANDSCAPE The Indian Spa Industry is highly fragmented with spas across the country. A few Brands like Sansha, Orient Spa, Kerala Ayurveda have a chain of outlets barring them most of the Spas in the country are single destination operative. Large hotels themselves have expanded their services to encompass spa services & Destination spasLarge hotels themselves have expanded their services to encompass spa services & Destination spas are competing for both local and foreign customers. As of now, around 70 per cent of the spa business is run by local brands, while the rest is taken over by international spa firms. The Industry is expected to witness exponential growth in the times to come & many players both domestic and international are setting up expansion plans Many standalone day and destination spas are being set-up in major cities are such majory y p g p j j establishments, its expected that nearly 700 new Spas will be added over the coming few years Being one of the biggest platform for customer orientation India has become one of the most popular destinations for the global players. International Brands like MSpa International from Thailand, Aman Resorts From Singapore & Xpress Spa from US are establishing a presence and planning to scale upResorts From Singapore & Xpress Spa from US are establishing a presence and planning to scale up. Domestic entrants are abound in the market with plans for multiple locations concentrated in tier- I and tier - II cities Devenio Optimus Advisors Pvt Ltd 息 2010 Private & Confidential
  • 13. GROWTH DRIVERS With more and more multinational companies setting base in India, India is seeing an increasing number of business travelers combining business with leisure and the MICE (Meetings, Incentives, Conventions, and Events) market is growing. Women today visit beauty salons not as much to look better as to feel good and have some time forWomen today visit beauty salons not as much to look better as to feel good and have some time for them. They want to pamper themselves and are constantly on the lookout for new experiences. Traditionally Men used to visit saloons only for haircuts or a quick shave but times have changed and a average Indian male today loves to visit Spas to relax and de-stress himself. Young Men are one of the f t t i t t f th S i d tfastest growing customer segment for the Spa industry. Increase in disposable income has made Spa treatment affordable. Spa treatment is not longer a luxury services beyond the reach of an average person. A huge middle class with a ever increasing appetite for newer and better goods and services, provide Spas a large client base.g , p p g The ever so stressful life style and pressures all around have made Spa treatments to de-stress & rejuvenate a necessity for the ambitious young professionals. The truth of an Affordable Health Destination Medical wellness and cosmetic med spas is a boomingThe truth of an Affordable Health Destination - Medical wellness and cosmetic med spas is a booming business as it fills certain critical gaps in the traditional health care system. Spas tie in with medical tourism as part of the post-op recuperative holiday. Devenio Optimus Advisors Pvt Ltd 息 2010 Private & Confidential
  • 14. CHALLENGES The Spa industry is highly fragmented & unregulated. Lack of standardization. There is no regulatory body which ensure that a certain quality standard are maintained across the Industry. Every Spa in India does the same Traditional Treatments differently, simple therapy like Ayurvedic Massage is done in different manner in different places, for example, Shirodhara is done at any time of the day, where as it is strictly contra indicated in the afternoons. L k f dit d t i i i tit t D t hi h t i d i t il il bl HLack of accredited training institutes. Due to which trained manpower is not easily available. Human resources are at premium in the Industry. Lack of Government support in promotion of industry except in few cases Shady places working under the name of Massage joints giving a bad name to the profession & Industry. Devenio Optimus Advisors Pvt Ltd 息 2010 Private & Confidential
  • 15. FINANCIAL OVERVIEW A Spa with 3 therapy rooms & 3 foot massage chair will require an area of 1500-1800 Sq ft. Capex on Per Sq ft basis (More lavish you make more will you spend) `. 2000 & above Capacity Utilisation for a Spa is around 50-60%p y p % Average Cost for a body therapy `. 2000 Average Cost for a Foot therapy `. 500 For a 1500 Sq Ft Spa@ 55% UtilisationFor a 1500 Sq. Ft Spa@ 55% Utilisation Revenue generated per Sq Ft. `. 7,623 Cost per Sq. Ft `. 5,533 EBITDA per Sq. Ft `. 2,090 EBITDA % 27%EBITDA % 27% Cost Structure Employee Cost 30% Rent 36% Source: DO Research Rent 36% Electricity & Water 6% Consumables & Other Cost 23% Marketing & Publicity 5% Devenio Optimus Advisors Pvt Ltd 息 2010 Private & Confidential
  • 16. 2nd Floor Devenio Optimus Advisors Pvt. Ltd. No 5022nd Floor, 27, Babar Road New Delhi 110 001 Tel : +9111 4151 0900 Fax : +9111 4151 1140 No.502, Shah Sultan Complex, Cunningham Road Bangalore 560 052 Email : contact@devenio.in Mergers & Acquisition Private Equity Placements Debt Placements Transaction advisory Devenio Optimus Advisors Pvt Ltd 息 2010 Private & Confidential