Henkel AG, the Germany based FMCG firm, is mulling the sale of its stake in Henkel India, its subsidiary in the Indian subcontinent, the times of India reported. According to the reports, Henkel AG may be mulling to divest either part of the stake or offload its entire stake in the subsidiary. Henkel India is a joint venture between Henkel Germany with 50.97 per cent stake and Tamil Nadu Petroproducts, a subsidiary of Spic Group with 16.6 per cent stake.
Henkel India has operations in laundry, home care, cosmetics, toiletries and hair care. Some of its brands include Pril, Henko, Fa, Margo, Mr. White, Chek, Bref, Igora Royal, BC Bonacure, Strait Therapy, Glatt & Natural Styling and Osis. Tamil Nadu Petroproducts, which owns nearly 17% in the company supplies linear alkyl benzene (LAB), a key ingredient to make zeolite based phosphate free detergents.
The Germany firm is mulling the divestment of its subsidiary due to declining performance. Henkel India has failed to capture a sizeable market share in the country, despite having been around for more than two decades. In the fiscal year 2006-07, the net profit of Henkel India was Rs.11 Crore, which declined to Rs.3.71 Crore in 2007-08, further declined to loss of Rs.12.61 Crore. Henkel AG exited its China business of detergents and home care.
Last year, UK-based Reckitt Benckiser acquired Ahmedabad-based FMCG major, Paras Pharmaceuticals Ltd for Rs 3,260 crore. One likely outcome could be Henkel inducting a new joint venture partner for its FMCG and personal and home care businesses, said the report.
The report quoted sources saying there is a clear discord between the two promoters, Henkel and Spic. While the Spic group is unable to commit further funds to expand business, Henkel too has been only a fringe player in the FMCG place, it indicated.
Potential suitor list include domestic firms Godrej, Wipro and Jyoti Laboratories which have explored transaction possibilities with Henkel India in the recent past, said the times of India report. Henkel, which has reshuffled its top deck in Asia Pacific recently, is expected to review the future of Indian operations in the next six months.
Henkel AG & Co is a Germany-based company organized into three business sectors: Laundry and Home Care, Beauty and Personal Care, as well as Adhesives, Sealants and Surface Treatments.
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