Henkel-Spic Begins Due Diligence Of Swc Division
Henkel-Spic, the consumer products joint venture company, has begun a one-month due diligence exercise of Shaw Wallace & Co (SWC)'s consumer products division (CPD).
Sources said yesterday that the exercise has been necessitated following the invitation to Henkel-Spic for the takeover of SWC's consumer products division.
Henkel-Spic's bid at Rs 46 crore was the highest for the SWC unit Rs 46 crore, which is 10 per cent higher than the Rs 42 crore reserve price.
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The exercise will entail a detailed study of all the books of the two companies under the division -- Detergents India, Calcutta Chemical Company Ltd.
Besides, it will conduct a detailed study of various brands under the division like Margo, Neem, Chek and Tuhina, most of which still command considerable brand equity.
The exercise also marks the formal beginning of the process of taking over SWC's consumer products division. Nearly seven bidders, including the consumer products giant Hindustan Lever, were in the fray for the acquisition of CPD.
Once the evaluation process and other legal formalities are completed, the money for the acquisition will be deposited in an escrow account, from where funds utilisation will be monitored.
Henkel-Spic's acquisition of the SWC division would herald the entry of another major multinational into Bengal.
Earlier, Henkel's plans to enter the state was stalled temporarily owing to problems from the employees side.
The sale of CPD forms the crux of SWC's Rs 150-crore financial rehabilitation plan drawn up with the help of the nominees of the government and the Company Law Board.
During 1995-96, the Calcutta Chemical Company recorded a turnover of Rs 45.69 crore for the 14 months ended May 31,1996, up from Rs 37.87 crore of the previous year. Profit for the period rose to Rs 9.17 crore against Rs 75.75 lakh recorded in the previous year.
The net worth of the company turned positive as on May 31, 1996, and it ceased to be a sick company as defined by the Sick Industrial Companies (Special Provisions) Act, 1985.
Its main product, Margo soap, continued to hold its own in the market despite intense competition. During 1995-96, the company launched Neem toothpaste in lamitube packing nationally and also relaunched its Tuhina cream in a new pearlised pack.
The other constituent of the CPD, Detergents India Ltd, recorded a net profit of Rs 8.82 lakh, down from Rs 21.54 lakh of the previous year.
On April 15, SWC invited bids to buy a majority stake in companies manufacturing and selling soaps and detergents held directly or indirectly by SWC and certain assets and liabilities of its consumer products division.
The bidders had to formally execute a confidentiality agreement at the time of submitting the bids, last for which expired on May 2 last. Prudential Capital Markets Ltd is the manager to the bids.