Jyothy Labs gets a foot in the Henkel India door

Jyothy Laboratories Ltd, the maker of Ujala fabric whitener, on Wednesday acquired 14.9% stake in Henkel India Ltd, which sells products across personal care, laundry and home care segments.

Jyothy bought 1,73,51,686 shares of Henkel at Rs35 each from Tamil Nadu Petro Products Ltd (TNPL) for an all-cash deal amounting to Rs60.73 crore.

Prior to the deal, TNPL held a 16.66% stake in Henkel India.
German parent Henkel AG & Co still holds close to 51% stake in the India business.

Ullas Kamath, deputy managing director, Jyothy Laboratories said his company is also bidding to gain Henkel AG’s stake in the business.

“We are also bidding for the 51% stake that Henkel AG has in the business and we will be more aggressive now,” Kamath said.
For calendar year 2010, Henkel India reported a turnover of Rs450.17 crore and net profit of Rs1.13 crore.

Several fast moving consumer goods companies including Emami Ltd, Wipro Consumer Care Ltd, Cavinkare Ltd and Godrej Consumer Product Ltd are bidding for Henkel’s stake in the company.

Harsh Agarwal, director, Emami said, “Yes, we do have an interest in Henkel India’s brands and we will evaluate their portfolio.”
A Mahendran, managing director of Godrej Consumer Products, conceded that his company was looking for acquisitions, but refused to say whether it is bidding for Henkel India’s business.
 
Dabur, on its part, said it does not give guidance on acquisitions.
The stake acquisition by Jyothy is being seen as a pre-emptive bid, aimed at securing a foothold in the company and set up a deterrent for the other bidders.

Henkel India sells Henko and Mr White brand of detergents, dish-wash brand Pril, Fa deodorants, Neem Active toothpaste, and Margo soaps. The company has a unit in Karaikal, Puducherry.

The parent company Henkel AG, this year, gave the mandate to HSBC to divest the company’s assets across categories of personal care, laundry and home care.

Kamath said Jyothy and Henkel India share synergy in various segments, including fabric care, dish-wash, personal care and home care.

“We will become more powerful in the segments we operate in,” Kamath said.

Jyothy was being advised by Mape Advisory Group, a boutique investment bank.

Henkel India’s managing director Jayant Singh is already on his way out from the company. Henkel AG was reportedly unhappy with the slowing performance of its India business and decided to exit the company.

An e-mail sent to Henkel India did not draw any response.
Earlier this week, Henkel India had clarified on the Bombay Stock Exchange that it was not looking at selling its business. “Henkel India’s business is not on the block,” it said.

The company, however, said it wanted to sell its hair care division, which includes the Schwarzkopf Professional brand.

Jyothy is present in categories like fabric care, mosquito repellent, surface cleaning, personal care and incense sticks. In recent years, it has also forayed into the laundry service chain business through Jyothy Fabricare Services Ltd.

The company has 28 manufacturing facilities in 16 locations across India.

The company in August 2010 raised `228 crore through a qualified institutional placement for funding acquisitions, mainly in the fabric care space.

“We have a bank balance of `270 crore, and we can we are a debt free company. We can raise money further,” Kamath said.