Jyothy steps up focus on Henkel brands

Jyothy Laboratories, the fabric and household care company, proposes to step up investment in Henkel products as it eyes a possible 26 per cent stake purchase by the German company in 2016-17. The Dusseldorf-headquartered company has the option of buying the stake, in line with the deal signed when its Indian operations were bought by Jyothy in May 2011.

S Raghunandan, chief executive of Jyothy, told Business Standard his priority in two years would be to strengthen the presence of its Pril, Margo, Fa and Henko products, which give the Mumbai-based company 30 per cent of its Rs 1,300-crore annual revenue. "Henko (detergent powder) will be relaunched in the June quarter. We will also come out with new extensions under Margo in personal wash, drive home the premium positioning of Pril in the dishwashing space and look at new product formulations for Fa (a body care brand)."

Raghunandan, according to persons in the know, is likely to meet the Henkel AG management shortly to work out how Fa could be refurbished for the Indian consumer. The product, smallest in Jyothy's portfolio of brands (Ujala, Exo, Maxo, Pril, Margo and Henko are others), has deodorants and talcum powders under it. Raghunandan says the brand, licensed to Jyothy by Henkel, for which it pays a two per cent royalty, along with Pril, has the potential to grow, given the evolution of the personal care space in India in recent years. "Fa is big abroad but not here. We (Jyothy and Henkel) have to sit down and work out where it can be taken," he said, without indicating what he has in mind. But a relaunch is likely, though Raghunandan said it might not happen soon.

Jyothy is expected to roll out national campaigns for Ujala, Exo and Maxo in the June quarter as it pushes these products aggressively into urban markets. "Jyothy's products have been strong in rural areas and Henkel's in urban areas. My endeavour is to take these into urban areas."

The company gets 60 per cent of its revenue from urban areas and 40 per cent from rural markets.

Two years earlier, Raghunandan says, it was exactly the opposite. "The Henkel acquisition did give us the necessary profile in terms of brands. We have to capitalise on this now, with sustained brand-building," he said.

Jyothy has doubled advertising spending to 10 per cent of sales from five per cent a year before.

This is expected to grow as the company steps up investments behind its brands.

The company is also looking at regional acquisitions, mainly in the south, to support categories such as personal care and fabric care. In December 2013, it had raised Rs 263 crore via a preferential allotment of shares to a promoter group company, Sahayadri Agencies. This, with internal accruals of Rs 220-250 crore, will be deployed to make the new acquisitions.