US consumer products major Sara Lee has terminated the licence of Godrej Consumer Products subsidiary Godrej Household Products (GHPL) to sell Kiwi shoe care and Kiwi Kleen brands in India and Sri Lanka, respectively.
The move comes following the sale of Kiwi, including shoe care accessories Bama International and Kiwi Kleen, by Sara Lee globally to household products major S C Johnson earlier this year. S C Johnson will acquire the Kiwi portfolio for $348 million (or Rs 1,566 crore).
In India, Sara Lee will pay GHPL Rs 177 crore for the termination, which is effective April 3. The transaction will be reflected as a one-time profit in GCPL's books in the first quarter of 2011-2012.
At the start of the current financial year, GCPL had sold air freshener Ambipur to Procter & Gamble (P&G) for Rs 40 crore. This followed Ambipur's sale globally to P&G by Sara Lee.
Brylcreem, another Sara Lee brand, the licence of which is held by the Godrej Group, has also been sold to Unilever globally, but the brand is yet to be withdrawn by GCPL in India. When asked, GCPL managing director A Mahendran said he was not in a position to offer a timeline on when Brylcreem would be withdrawn. But analysts expect it will happen soon.
Sara Lee has been looking to move out of non-core areas to focus on its core segment of foods. The process of divesting its interest in household and personal care has been on for over a year now.
In India, GCPL had acquired Sara Lee's 51 per cent stake in the joint venture Godrej Sara Lee in May 2010. This was for a consideration of Rs 1,050 crore. Mahendran says the Sara Lee brands contributed less than 10 per cent to the joint venture's turnover. "The bulk came from brands controlled by us, such as Good Knight and Hit," he said.
GCPL chairman Adi Godrej also said categories such as shoe care were a non-core segment for the company. "This termination helps us to become more focused on our core categories, in line with our three by three strategy. Namely, presence in emerging markets in Asia, Africa and Latin America through three core categories — personal wash, hair care and home care.
The company on Wednesday announced it had begun production of personal care products at its factory in Guwahati.
The stock of GCPL was down 1.09 per cent on Wednesday on the Bombay Stock Exchange, to close trade at Rs 354.10 per share. Its intra-day high was Rs 364.50, while its low was Rs 352.
