Elder Pharma to invest Rs 20 cr for cosmetics foray

The company has recently entered into an agreement with Japan's Kose Corporation to form a JV company to manufacture & sell cosmetics

Elder Pharmaceuticals will be investing Rs 15-20 crore over the next two-three years for its foray into cosmetics manufacturing, an official has said.

"We are looking at investment of Rs 15-20 crore over the next two-three years for marketing and manufacturing of cosmetics," Elder Pharmaceuticals Joint Managing Director Alok Saxena told PTI here.

The company plans to manufacture cosmetics at its existing plant in Paonta Sahib in Himachal Pardesh, which is making pharmaceutical products.

Elder Pharm has recently entered into an agreement with Japan's Kose Corporation to form a JV company to manufacture and sell cosmetics in the market.

The agreement stipulates that Kose will focus on the Indian market through the JVC for manufacturing and selling cosmetics in India.

Kose will hold 60% and Elder the 40% in the proposed JV.

"We are looking at getting this project on-steam in the next two months. The Himachal Pardesh plant will be used for making cosmetics products because we will be following the same manufacturing norms as we do for pharmaceutical products," he said.

Saxena said Elder, by forming the joint venture, has deviated from its usual strategy of in-licencing products from foreign companies, owing to the huge opportunity in domestic market.

The product portfolio includes skincare and body-care products, Saxena said, adding they were over-the-counter (OTC) products.

Saxena added that India's facial skincare segment is estimated at around Rs 5,500 crore. "Therefore, the target will be in skincare market. Our incremental revenues could run between Rs 30 crore and Rs 40 crore in the first year", he said.

The joint venture company is provisionally named Kose Elder (India) Private Ltd.

"Cosmetics manufacturing is an altogether different area for us. The initial investments could run into a couple of million dollars. We have not finalised the business plan as yet, but we are looking at giving them (Kose Corporation) complete support of manufacturing and distribution in Indian market", Saxena added.

The company is looking at both the mass segment and the prestige segments. All the products are intended to be 'Made in India' products.

"India is a developing consumer market with strong growth potential. Women's fashion is also diversifying, and tastes in cosmetics are changing dramatically. Almost all the products initially in the first few years will be skin products in the form of creams, lotions and ointment. The total market in this segment is about Rs 18,000 crore," Saxena said.