British consumer goods major Reckitt Benckiser (RB) is all set to re-launch condom brands Durex and Kohinoor in India, which it now controls, following the settlement of the dispute with erstwhile joint-venture partner TTK.
In 2011, RB and TTK had dragged each other to court over TTK-LIG, the joint venture (JV) set up for manufacturing condoms. The settlement in November last year saw RB sell its 49.87 per cent stake in the JV to TTK for Rs 150 crore in return for the rights of the two brands in India.
Chander Mohan Sethi, RB's senior vice-president for South East Asia, said the two products would be relaunched shortly as the British firm, headquartered in the industrial town of Slough, 22 miles from London, increasingly focuses its attention on the healthcare segment. The latter gives RB 22 per cent of its $15 billion (or Rs 92,790 crore) global revenues.
The focus on healthcare is part of India-born chief executive officer Rakesh Kapoor's endeavour to help the British giant move away from competitive segments such as home cleaning solutions and detergents, which give it 21 per cent of its total revenues. Here, RB competes with the world's largest and second-largest consumer products companies - Procter & Gamble and Unilever - which analysts believe isn't easy, given the scale of its rivals.
In the last two years, RB has made a string of acquisitions in healthcare in a bid to beef up this portfolio, with plans in place to push this segment to contribute over half its turnover in the next three years. Emerging markets are expected to drive this agenda forward, with India and China being key.
Sethi says that he is expecting the healthcare segment, which gives the Indian unit 15-20% of its nearly Rs 3,000 crore annual revenues, to become a third of its business in three years.
This will be led by growth of new and existing brands as well as acquisitions. After the Rs 3,260-crore Paras deal in December 2010 - one of the most expensive FMCG transactions in the last few years - RB is yet to do a new acquisition in India. Sethi says further acquisitions cannot be ruled out.
While Dettol still contributes over half of RB's India revenues, products such as Dispirin, Strepsils, as well as erstwhile Paras brands such as Moov, Ringguard, Itchguard - which are part of the healthcare portfolio - have been growing in double-digits.
RB is expected to get more healthcare products from its global portfolio into India in the next few years targeting areas such as indigestion, pain relief and heart burn - segments that are growing since these problems commonly afflict Indians.
RB, Sethi says, is also looking at India as a possible manufacturing hub for condoms after Thailand and China.
"As part of the settlement with TTK last year, they took control of the manufacturing facilities under the JV, while we got the brand rights. We now depend on third-party manufacturers to produce condoms. We are, however, looking at whether India can be converted into a possible third manufacturing hub going forward," Sethi says.
TTK-LIG, interestingly, manufactured condoms for RB's global markets. But the dispute over control of the JV hampered supply to international markets. It was then that RB converted Thailand and China into hubs for condom production, with plans now to encourage manufacturing in the Indian market.
