Henkel has option to invest in Jyothy

Henkel is said to be contemplating a 26% stake for Rs 500-600 a share, either through a fresh issue or a preferential allotment

German consumer goods maker Henkel AG has an option to invest in Jyothy Laboratories, the latter’s joint managing director & CFO, Ullas Kamath, told Business Standard.

“They can invest up to 26 per cent in Jyothy but only between April 1, 2016 and March 31, 2017,” Kamath said in response to a specific query.

Speculation about the German major’s interest in the Mumbai-based fast-moving consumer goods maker has been growing in recent months. Henkel is said to be contemplating a 26 per cent stake for Rs 500-600 a share, either through a fresh issue or a preferential allotment. Kamath said nothing had been finalised.

“How they wish to exercise the option is up to them. They can either do a primary infusion or a secondary market transaction or the promoters can offload stake via a preferential allotment. It is a call that they will take. There has been no finalisation in terms of price, since it has to be mutually agreeable to all shareholders,” he said.

As of September 30, the promoter group holding in Jyothy was 66.74 per cent, marginally lower than the 66.78 per cent held in the quarter ended June. Foreign and domestic institutional investors together held 24.13 per cent at the end of the September quarter. Non-institutions and bodies corporate held 9.13 per cent and 3.3 per cent, respectively, showed the data on Jyothy's shareholding pattern on the BSE exchange.

Jyothy had bought 50.97 per cent in Henkel India in May 2011, subsequently merging the latter with itself. The combined turnover at the time was close to Rs 1,300 crore; it reached Rs  1,505 crore in FY15. While this is lower than Jyothy’s initial estimate of touching Rs 3,000 crore in net sales in five years, analysts say with Henkel looking at a possible re-entry, the dynamics could change for Jyothy, which could gain international experience and knowhow.

The German major has already licensed two of its brands, Pril and Fa, to Jyothy for a two per cent royalty. The possibility of it licensing some of its other brands was there if it came on board as a 26 per cent investor, said analysts.  This could increase the heft of Jyothy in the marketplace — it has various brands, including  flagship Ujala, Maxo and Exo in the fabric care, mosquito repellents and dishwashing segments, respectively. Some of its other brands after the Henkel India acquisition include Henko, Mr White, Chek, Neem toothpaste and Margo, now owned by Jyothy.

Ujala, Maxo, Exo, Henko, Pril and Margo are ‘power brands’, giving Jyothy 80 per cent of its business. Mr White is expected to join the power brands club by the next financial year.

INDIA MOVES

• Henkel AG can invest up to 26 per cent in Jyothy Labs between April 1, 2016 and March 31, 2017
   
• Henkel could do this either through a fresh issue or a preferential allotment
   
• Jyothy had bought 50.97 per cent in Henkel India in May 2011, subsequently merging the latter with itself
   
• The German major has already licensed two of its brands, Pril and Fa, to Jyothy for a two per cent royalty
  

 

The possibility of it licensing some of its other brands was there if it came on board as a 26 per cent investor