The transaction would be by subscribing to 2.28 lakh compulsory convertible preference shares, to be converted by July 2020, and that too only if certain performance parameters are met
Fast-moving consumer goods (FMCG) player Emami Ltd has entered into a pact to pick up 26% stake in Brillare Science Pvt Ltd, an Ahmedabad-based, family-run entity that caters to professional needs of premium salons and spas with brands like Brillare, Elementi Puro and Root Deep.
However, after burning its fingers in acquiring brands like Kesh King hair oil and She Comfort sanitary napkin, Emami is now playing safe.
This time, the transaction would be carried out by subscribing to 2.28 lakh compulsory convertible preference shares (CCPS) at an undisclosed valuation, to be converted by July 2020, and that too only if certain performance parameters are met.
The conversion would happen on the basis of "achievement of agreed future performance of the investee company," Emami has disclosed as part of its regulatory filing.
In a similar way, in December last year, Emami had said it would spread out its acquisition of 30% stake in Helios Lifestyle, which owns the e-commerce-only brand The Man Company, in tranches over a period of a year till December 2018.
This strategy contrasts with its earlier all-cash deals for brands like Kesh King and She Comfort, both of which haven't performed well.
In the third quarter, Kesh King's sales dropped by as much as 19% while Emami has been contemplating writing off She Comfort for some time.
That said, back-to-back deals to potentially pick up stakes in two niche brands like The Man Company and Brillare would help Emami, which so far has been straddling the rural and mass-market personal care segment with brands like Boroplus, Navratna, Zandu range, Fair and Handsome, to get a foothold in the niche and premium skin care, hair care and toiletries brands that can be scaled up.
"With increasing aspirations of people to look and feel good, demand for specialised and professional personal care products and treatments has increased. Brillare, with its unique offering of natural yet effective products, has the potential to meet the demand of this growing market," said Harsha V Agarwal, director, Emami.
Set up in 2009, Brillare has been growing exponentially, achieving a turnover of Rs 13 crore in FY17, which has grown from a level of Rs 3.60 crore in FY15. While it sells its professional products mostly to salons and spas across the country, it also sells some select products through e-commerce sites like Amazon and Nykaa.
NEW FORMULA
- The transaction would be by subscribing to 2.28 lakh compulsory convertible preference shares, to be converted by July 2020, and that too only if certain performance parameters are met
- This strategy contrasts with its earlier all-cash deals for brands like Kesh King and She Comfort
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In a similar way, in December last year, Emami had said it would spread out its acquisition of 30% stake in Helios Lifestyle, which owns the e-commerce-only brand The Man Company, in tranches over a period of a year till December 2018.
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