Jyothy Labs plans IPO

Mumbai-based fast moving consumer goods company Jyothy Laboratories plans to tap the capital markets later this year. This will be the first FMCG IPO after a gap of two years. The last FMCG company to go public was the Kolkata-based Emami.

Jyothy Labs, best known for its Ujala brand of liquid fabric whiteners, is said to be planning Rs 300 crore initial public offering which is expected by the end of 2007. Investment banking sources said that the company had appointed Kotak and Enam as advisors to the issue.

Jyothy Labs is a closely held company with about 70 per cent stake being held by founder Chairman and Managing Director M P Ramachandran and his family. The balance 30 per cent lies with private equity firms CLSA and Actis along with a foreign subsidiary of ICICI Bank. The foreign investors are likely to exit the company at the time of the IPO. Ramachandran was unavailable for comments.

Jyothy Labs sales are pegged at between Rs 400 and Rs 500 crore. The company is said to have been valued at around Rs 1,000 crore.

Over the last few years, there have been unconfirmed reports that other FMCG companies like Godrej Consumer and Reckitt Benckiser were keen on either buying out or acquiring a stake in Jyothy Labs. However, the promoters are said to have been unwilling to give up control, preferring to opt for private placement first and now a public offering.

After launching Ujala nationally in 1997, the brand has gone on to become the market leader in the fabric whitener category, snatching share from Reckitt's Robin Blue. It has over the years entered other product categories like mosquito repellents (Maxo), personal care products (Jeeva), detergents (Speed), cleaners (Exo) and air freshners (Maya). The company also has a significant volume of exports to 14 countries including Sri Lanka, Mauritius, Malaysia and Hong Kong.

CCL Products India, an Andhra Pradesh-based coffee company has set up a joint venture company with Jyothy Labs to launch instant coffee under the 'Continental Speciale' brand name.

Locally, the company has a well established distribution network of close to 4,000 distributors across the country. As a result, other FMCG firms have entered into strategic agreements with the company to piggy back on its network. Godrej Beverages and Foods sells its tea brand Godrej Tea through Jyothy's network.