Jyothy Laboratories open to new partnerships post Henkel break-up

Says not looking for strategic investment, but want alliances in research, development, technology

Consumer goods major Jyothy Laboratories — best known for brands such as Ujala and Henko — is open for new partnerships following a breakdown in talks with German company Henkel last year. Henkel's window to invest in Jyothy lapsed on October 31 after it failed to exercise the option for picking up 26 per cent stake in the firm.

Speaking with Business Standard, Ullas Kamath, joint-managing director, Jyothy Labs, said: “We are not looking for strategic investors because our experience tells us that they would want to get involved in the running of the business. This could result in a culture clash, which could be detrimental to the company. What we are instead open to is a financial investment or even alliances in research, development and technology. We are also open to brand alliances with companies keen to set up base in India. This is a more acceptable arrangement to us.” 

The breakdown in talks between Henkel and Jyothy was ascribed to their inability to arrive at a consensus on the way forward for the firm. Jyothy, sources said, wanted more brands from the Henkel stable in addition to Pril and Fa for which it pays a 2 per cent royalty to the German major. Jyothy was also seeking greater leeway in running the business, while the German company wanted more say in day-to-day management.

Kamath said the “Henkel chapter is over” and that the focus would now be on the next level of growth. “By 2021, we want to touch a turnover of Rs 40 billion. For this, we are looking at both organic and inorganic growth,” he said. 

While, the company is likely to close this financial year with a topline of Rs 18 billion after taking into account the goods and services tax, the next financial year may see it cross Rs 20 billion in turnover, Kamath said. “We should consistently grow over the next two years thereafter, but we will need to support this growth with a few regional acquisitions,” he said.

The acquisitions, he said, would be in Jyothy’s existing areas of operations, including fabric care, home care, personal care and surface cleaners. “We wish to consolidate our presence in our existing areas of operation. The acquisitions will act as bolt-on transactions, intended to push topline. Once we touch Rs 40 billion in turnover, the next level of growth would be for the Rs 80-billion-mark in terms of topline.”

Jyothy is also looking to ride the herbal revolution in consumer goods, using brands such as Margo soap and Neem toothpaste. For the quarter ended December, Margo soap, with a turnover of Rs 1.75 billion, reported a 44 per cent year-on-year growth, emerging among the fastest growing brands within Jyothy’s portfolio. While Neem toothpaste is a smaller brand (Rs 300 million turnover), Jyothy has plans to take it national, and also export it to south-east Asia.