Post Henkel investment, acquisitions on Jyothy's mind

Jyothy, which acquired and then merged Henkel's Indian operations, has been looking at newer segments within home and personal care

Mumbai-based Jyothy Labs is likely to get back to making acquisitions, once German major Henkel exercises its option to invest in the company. The German major can pick up 26% in Jyothy in FY17 as per an earlier agreement. It is said to be contemplating buying the stake for Rs 500-600 per share, though company officials have not confirmed it.

Jyothy, which acquired and then merged Henkel's Indian operations a few years ago, has been looking at newer segments within home and personal care. Acquisitions, say analysts, could give it the necessary leg-up in this regard.

The company reported a 47.4% increase in consolidated net profit to Rs 39 crore for the quarter ended December 2015. Net sales grew nearly 8% to Rs 385 crore for the quarter under review.
 

Revenues of soaps and detergents, which includes brands such as Ujala, Henko, Exo, Pril, Margo, Mr. White and Chek stood at Rs 287.25 crore in the third quarter, up 4% only.

Home care, which includes mosquito repellent Maxo and Exo surface cleaner, grew 25.1% for the quarter to Rs 82 crore.

Jyothy's last major M&A transaction was in 2011, when it acquired the Indian operations of Henkel, subsequently merging the latter with itself. The combined turnover at the time was close to Rs 1,300 crore; it reached Rs 1,505 crore in FY15.

While this is lower than Jyothy’s initial estimate of touching Rs 3,000 crore in net sales in five years, analysts say, with Henkel looking at a possible re-entry, the dynamics could change for Jyothy, which could gain international experience and knowhow.

The German major has already licensed two of its brands, Pril and Fa, to Jyothy for a 2% royalty. The possibility of it licensing some of its other brands was also there if it came on board as a 26% investor, said analysts.