Monday, January 18, 2010

Reliance Retail loses out to VVF to acquire 3 Henkel brands


Mumbai-based VVF Ltd beat Mukesh Ambani’s Reliance Retail to acquire three brands from detergent and home care company Henkel India, namely Aramusk and Moloy soaps and Mahabringol hair oil.

The move comes three months after VVF, the makers of Doy and Jo soaps and one of the world’s largest contract manufacturers of bar soaps, bought out Henkel’s plant at Tiljala, Kolkata.


Rashmin Joshi, president and director (consumer goods) of VVF, confirmed the development. “We have been looking at such acquisitions as part of our core growth strategy,” he added. Reliance Retail, which was keen to buy the three regional brands on the block to boost its private brands business, lost out because Henkel was keen to sell them off along with the plant.

“Reliance Retail was keen only on acquiring the three brands; so lost out to VVF,” an official directly involved with the development said.

The total deal is estimated at Rs 22-23 crore, with the plant accounting for Rs 17-18 crore, the official said.

Although the brands do not bring in much turnover at a national level, they are attractive local buys. Aramusk is among the oldest male deodorant soaps in the country with a loyal consumer, while Moloy sandalwood soap and Mahabringol hair oil have reasonable equity in eastern India.

“We plan to take the three acquired brands national in due course,” said Mr Joshi, pointing out that his Rs 1,350-crore company already covers one million outlets across the country. The Kolkata plant, which can produce 10,000 tonnes of soaps per year and a smaller amount of toothpaste, will be VVF’s eighth plant.

It will manufacture Henkel’s Margo, the three acquired brands, and its own Doy at the plant, Mr Joshi said.

The Chennai-based Henkel India, 51% owned by Düsseldorf, Germany-based Henkel group, put the three brands on the block last year. Media reports had said Marico and Emami too were interested in Aramusk and Moloy brands.

The company wanted to prune its portfolio to focus on flagship brands Henko and Mr White (both laundry care products), Pril dishwasher, Margo soap, Fa deodorants and Neem toothpaste.

Alongside, Henkel — which also makes haircare brands Igora, Bonacure, Glatt and Palette and Bref surface cleaners — also decided to divest the Kolkata plant to concentrate on marketing.

Henkel had acquired the plant along with Aramusk and Moloy brands one decade ago when it bought out Shaw Wallace’s consumer care division, which included Calcutta Chemicals and Detergents India.

Henkel now has only one plant in Pondicherry for manufacturing its laundry and home care products. About a dozen contract manufacturers make the rest of its products as the company wants to focus on marketing and distribution.

Apart from soaps brands Doy, Doy Aloe Vera and Jo and contact manufacturing, VVF also makes oleochemicals, a key ingredient for soaps and cosmetics. In mid-2008, VVF had acquired Henkel’s soap manufacturing plant in Poland. It was the first European facility of the company with a global capacity of 300,000 metric tonnes.

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