In June 2015, Emami Ltd acquired ‘Kesh King’, an ayurvedic hair oil and shampoo brand, in a ₹1,651-crore deal. The costliest acquisition was expected to pay off, given the virtual monopoly that Kesh King enjoyed.

With the implementation of demonetisation and GST, and its impact on trade channels, the script changed. Competition heated up with Patanjali’s Kesh Kanti and Hindustan Unilever’s (HUL) recently-acquired Indulekha breathing down Emami’s neck.

Almost four years since the acquisition, the Kolkata-based FMCG company witnessed a turnaround of sorts, with Kesh King gaining market share.

Emami expects the brand to reach ₹300 crore by FY20, with increased focus on adjacencies (other offerings related to hair care) and a ramped-up online presence. It is expected to clock a growth of 15-17 per cent in FY20.

According to Priti A Sureka, Director, Emami Group of Companies, Kesh King had a market share of 29.2 per cent till December 2018. The ayurvedic hair oil market in India is pegged at around ₹900 crore.

“Demonetisation, GST and competition from deep-pocketed players like Patanjali and HUL came-in successive quarters. This was a time when the brand was finding its feet again. We had just come out settling things like overstocking, a legacy issue from Kesh King’s previous promoters’ (SBS Biotech),” she told BusinessLine .

Emami went back to the drawing boards. According to Sureka, one major part of its brand rejig focussed on improved formulations with focus on highlighting the USPs of tackling hair fall and ensuring hair growth (in some cases).

The ‘benefits’ were certified, as the home-grown FMCG company decided to take competition head on.

Branding and packaging were revamped as well. From a pre-dominant print positioning, Emami went ahead with television campaigns addressing common concerns surrounding hair fall. This included bringing in new brand ambassadors.

Around ₹40 crore was spent across the R&D and marketing, Sureka said, adding: “We were working on the formulations for three-odd years at our facilities in Mumbai and Kolkata. However, competition did pre-empt us to highlight some of the USPs on the packaging.”

Ramping up

Kesh King was re-launched in August 2018. Since then, the turnaround story is playing out on expected lines.

Between September 2018 and February 2019, the company saw a 28 per cent growth (in value terms). This came against a 10 per cent decline in sales, on an average, for four to five previous quarters. As sales head northward, Emami is now looking at adjacencies. Sureka did not share the categories. Emami is also eyeing expansion into South India with Karnataka being a target market. While Kesh King has a strong presence in the rest of India, the South Indian markets are dominated by Indulekha and other regional players.

Successful acquisition

“We believed there was value and scope for growth with the brand,” said Sureka.

Emami’s costliest buy, funded through internal accruals and debt, was paid off in FY19. “Today, Kesh King is not only profitable; but also EPS (earnings-per-share) accretive,” she added.

Sureka said that Emami is open to more acquisitions if they “bring value”. “Given an option, I will again go for an acquisition like Kesh King,” she said.

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