What you didn’t know about the Inkfruit-Zovi merger

The past fortnight has been intense for the 200-odd people who work out of Fingerprints Fashions’ corporate digs in Mumbai. Most of them will relocate to Bangalore over the next three months as the company completes its merger with Robemall Apparels. The merger brings together two of the country’s leading private label ecommerce brands, Inkfruit and Zovi, owned by Fingerprints and Robemall respectively.

“We started talking to people, filtering down the news (of the merger) about 10 days ago,” Inkfruit founder and CEO Kashyap Dalal told us when we visited the company’s offices on Monday. Dalal, who founded the company in 2007 with IIT Bombay batchmate Navneet Rai, is relocating to Bangalore himself, where Robemall is headquartered. “Mumbai will continue but as a smaller regional sourcing operation,” he said. Rai will move to Delhi, which will be the merged entity’s sourcing hub.

Both founders are slated to join the Robemall leadership team as co-founders. Dalal declined to comment on the specific terms of the merger.

Friendly merger or investor-driven consolidation?

As news of the merger filtered into the public domain over the last weekend, speculation has been rife that the deal is more in the nature of an acquisition by Robemall rather than a merger. There’s also been talk of the deal being driven by private equity investor SAIF Partners, which happens to be an investor and majority stakeholder (it owns more than 60 per cent) in both companies.

It is a fact that Inkfruit has been in the market to raise a fresh round of funding for a while. About four months ago, the company mandated investment bank Avendus Advisors to raise $10 million. “We started getting several interesting merger offers around that time. In our interactions with Zovi, we saw tangible synergies that could help us build the largest single brand business in the online apparel space. This was exciting and convinced us to move forward with this option,” says Dalal.

Negotiations with Robemall or Zovi started to intensify about a month ago. The leadership teams from both companies had several meetings across Mumbai, Bangalore and Delhi to deliberate on the possible synergies between the two companies. CEO Manish Chopra led negotiations on behalf of Zovi. When the teams on both sides reached an understanding, SAIF Partners and Zovi’s other investor Tiger Global put their stamp of approval on the deal with a fresh $10 million investment commitment in the merged entity.

“There’s no doubt that it’s a friendly merger, but the difference between Inkfruit and Zovi is that one had Tiger Global on board and the other didn’t,” said a venture capital investor source close to Inkfruit. SAIF Partners incubated Zovi in early 2011 and backed it with a $5.5 million Series A investment round in July that year. The round also included a clutch of angel investors including Makemytrip founder Deep Kalra. Later the same year, SAIF Partners teamed up with hedge fund Tiger Global to infuse a further $10 million in a Series B round.

Inkfruit has not exactly been starved for funds either. It started with an angel round from Anand Lunia (founder of India Quotient) and Seedfund’s Paula Mariwala and Mahesh Murthy. SAIF Partners entered the company in 2011, investing $3 million in the Series A round (the angels exited), and followed with a further $7 million over a couple of tranches (these investment rounds have not been publicly disclosed earlier).

We’ve reached out to SAIF Partners for their comments on the deal and will update when we hear back from them. Update: SAIF Partners’ Mukul Singhal shared his perspective on the deal with us — “It is still very early days in the private label ecommerce space and no player has a clear lead. This was an opportunity to create a market leader while that gap still exists. Some time into our investments both in Inkfruit and Zovi we realized that there were several overlaps and complementary skills in both the businesses,” he said over a telephonic interview.

Read the full interview — Mukul Singhal on Inkfruit-Zovi.

The next three months: synergies and integration

The Inkfruit-Zovi merger undoubtedly creates one of the strongest private label ecommerce players in the Indian market. Scale has become immensely important in the Indian ecommerce market over the past 12 months. The merger gives both players the ability to effectively compete with market leaders in the online fashion ecommerce space, notably Myntra. The Bangalore-based Myntra itself beefed up its presence in the private label space last November when it acquired Sher Singh. Incidentally, the Inkfruit-Zovi combine shares a common investor with Myntra in Tiger Global.

The companies are still working out the specifics of the integration but have set an aggressive three-month timeframe to get most of it in place. As things stand now, Robemall will be the formal entity that will own the two brands. Both brands are expected to continue to cater to their specific market segments on a common platform.

There are several synergies to be exploited. “A lot of it is in the tactical stages right now and we can’t share too many details. But we will synergize the areas that we are strong in with some of Zovi’s areas of strength,” said Dalal.

To begin with, the top leadership teams bring together two separate sets of DNA. Inkfruit’s founders, Dalal and Rai, come from a garage startup orientation and will bring that energy to bear on the merged entity. They’ve also gathered some invaluable hands-on experience in riding the ups and downs of the rapidly evolving ecommerce business in India. Zovi’s top team is made up of professionals inducted largely by its investors and will bring deep operating experience to the table. The two companies also address slightly different market segments that will now be served on a common platform. Inkfruit caters to a younger clientele, while Zovi is targeted at the more mature, upwardly mobile professionals market. The exact numbers on the monthly visitor traffic to the two sites are not available.

In terms of business models, Inkfuit’s strong co-creation base – it sources nearly 80 per cent of its designs from a large community of external designers – is likely to be incorporated into the Zovi model. Both companies manufacture their own products at their facilities in Bhiwandi near Mumbai (Inkfruit) and Delhi (Zovi). This is likely to continue with better efficiencies. The same will hold true for the raw material sourcing operations. About 60 per cent of merged entity’s sourcing is done from the northern region, roughly 30 per cent comes from the western region and the balance comes from the south.

The $10 million fund infusion from SAIF Partners and Tiger Global will be used chiefly to scale up infrastructure on the delivery side. Zovi runs its own delivery network and this will be stretched further. A significant part of the funds will be pumped into marketing.

If all goes well, the Inkfruit-Zovi merger could set the tone for further consolidation in the ecommerce space this year. Having deep pockets or investors with deep pockets and clear visibility on the road to profitability will separate the men from the boys.


  1. Tridibesh V says:

    Definitely looks like an acquisition. Inkfruit had no choice. If VCs wont put fresh money merger is only option.

  2. Manish says:

    Next step will be for Myntra to buy inkfruit-Zovi. Vcs are calling the shots.

  3. Harish says:

    Myntra is a way better company than either Zovi or Inkfruit. If they are smart they will never buy these two. Of course if Tiger is calling the shots, company has no say.

  4. Abhishek Sangvi says:

    The ecommerce wave is a lot like the dot com wave when investors concentrated a lot of investments in a one segment. We know how the dot com wave ended. This time investors are taking corrective action early. This is a good thing for ecommerce in the long term. Ink fruit is good brand with a poor execution model. The merger is the right decision. If the investors drove the decision, it was the right thing to do.

  5. Sourabh says:

    Abhishek, valid points but investors should not run companies. Often they cross the line. Good analysis of the deal by SC. keep it up.

  6. Rajeesh Nair says:

    I have been seeing Inkfruit products on Zovi lately and thought its just an associate partnership. Just today when I visited Inkfruit, I saw a completely redesigned look, something similar to Zovi and then came across this post. First Letsbuy.com was acquired by Flipkart and now this.. Seems lyk the internet boom is taking up heat in India…

    I assume there will be a lot such mergers in coming years.

  7. Santosh says:

    It’s very interesting to find all start-ups basically being owned by investors. The hard work of a group of people is pushed around by terms such as “poor execution model” and nonsense of that sort.
    @Abhishek Inkfruit was a great brand with a decent execution model. What was wrong about it?

    Secondly, it seems that the rich folks/ the so-called investor group controls all the smaller businesses in the country. It is highly possible that they’re satisfying their own self interest and not the business’s vision in general.

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