Henkel Gets Nod To Hike Detergent Unit Stake To 70%

Henkel KGaA, the German consumer goods giant, has obtained government nod to increase its equity stake in its detergent joint venture Henkel Spic India Ltd up to 70 per cent from the 60 per cent shareholding that was approved in September last year.

This means that Henkel will be allowed to bring in Rs 103.37 crore as foreign direct investment out of the total enhanced share capital of Rs 147.67 crore of the company after the rights issue. The clearance came at a Foreign Investment Promotion Board (FIPB) meet last Saturday.

Henkel had proposed to raise its stake to 70 per cent in the post-rights share capital by picking up the requisite shares either from its joint venture partner Tamilnadu Petroproducts Ltd or from the unsubscribed portion of shares available for public participation on rights basis.

A company board resolution last March had authorised the management to issue 7,38,30,000 equity shares of Rs 10 each on rights basis and subsequent board of directors meet had approved Henkel's proposal to increase its stake to 60 per cent. The company board recently approved in its meeting on March 31, 1997, to let Henkel pick up to 70 per cent stake post-rights.

However, the German multinational has till date brought in foreign equity only up to 46.77 per cent of the company's share capital, in spite of the 51 per cent shareholding approval given by the FIPB to Henkel in June 1994 and, thereafter, the clearance obtained by it in September 1996 to hold an increased equity stake of 60 per cent in the Indian company,

This was indicated in the company's application to the FIPB seeking its approval for the latest stake hike. Tamilnadu Petroproducts Ltd currently holds about 18 per cent of the shareholding while the balance is held by the financial institutions and the general public.

The company, earlier called Spic Fine Chemicals, was formed in 1992 with only 27 per cent equity participation by Henkel which later obtained permission to pump in greater equity investment to the tune of up to 51 per cent of the share capital.

Henkel Spic has set up a 30,000 tonnes per annum capacity zeolite-based synthetics detergent manufacturing plant in Pondicherry. It has also indicated in its government application its keenness to introduce its international range of toiletries and cosmetics and is exploring the possibility to forge an alliance with an Indian company.

The multinational's attempt to buy out Shaw Wallace subsidiaries Calcutta Chemicals and Detergents India Ltd is currently stalled with the sale caught in a legal crossfire between the estranged Chhabria brothers.