Jyothy Labs may launch Henkel brands in India

After the acquisition of Henkel India, Jyothy Labs is looking at the possibility of introducing new categories such as hair care, body care and adhesives from the German multinational's portfolio. Having stayed away from acquiring Henkel's salon brand, Schwarzkopf, Jyothy Labs is mulling over introducing some of its retail brands in hair care followed by other categories in India.

Mr Ulhas Kamath, MD, Jyothy Labs, said at an analysts meet, “We are looking at categories such as shampoos in hair care, but these would be retail brands. Henkel has already hived off its salon brand Schwarzkopf to a sister company in India as it was a loss-making venture. But Henkel has plenty of brands in categories such as hair care, body care and stationery.''

In fact, Jyothy has already invited two members from Henkel's marketing and finance functions to represent the company. “There are going to be two people from Henkel who will be permanent invitees, but not necessarily board members,” said Mr Kamath.

With intentions of becoming profitable by March 2012, Jyothy is now embarking on a cost-saving drive, besides recruiting a fresh field force to push sales of the debt-laden company. “Henkel has been carrying forward losses for the past 26 years. The employees of Henkel have to adapt to our culture and we have to bring in a new CEO. We would also be bringing in some marketing managers, who are expected to be best in class. There would also be new recruitment through campuses,” added Mr Kamath.

Giving a clear indication to the 400-odd employees of Henkel to cut expenses, Jyothy Labs expects an exodus of Henkel employees if they are not able to adapt to its work culture. Besides, Jyothy is also not ruling out bringing in investments from private equity players if needed.

“While the first task is to integrate and make Jyothy Henkel profitable, we may consider some portion of the company to go to private equity if we get a ‘fancy' valuation,” said Mr Kamath. Jyothy would also be reducing Henkel's sales through canteen stores. Almost 22 per cent of Henkel's sales is through canteen stores, while another 16 per cent is from the modern trade and the balance from key account holders; the business is mainly wholesale driven.

“Typically, canteen store sales should be between 2-3 per cent,'' claims Mr Kamath. After a period of five years, Jyothy is also expecting Henkel to make a comeback (with a 26 per cent stake) and this time around it hopes to be on a par with big MNCs such as P&G and HUL. As Mr Kamath says, “After May 31{+,} 2016, Jyothy Henkel should be like HUL and P&G in the home care sector.''

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