Henkel to divest Indian assets

MUMBAI/CHENNAI: Germany's Henkel AG has kick-started a process to sell its portfolio of Indian detergent and personal care brands, along with the manufacturing facility at Karaikal in Tamil Nadu. HSBC is advising the Dusseldorf-based FMCG giant to sell Henkel India's locally acquired brands such as Margo soap, Neem Active toothpaste and Chek detergent.

Henkel is also offering long-term licensing of international brands Henko, Pril and Fa to potential suitors, as it works towards exiting the laundry and personal care segments in India. Wipro and Godrej Consumer Products are the most likely suitors while Jyothy Laboratories could also join the race. HSBC is involved with restructuring of the India unit ahead of the sale, as the $17-billion German conglomerate wants to continue with hair colour (Schwarzkopf) and industrial business in the country. An HSBC spokesperson declined to comment. Email to Henkel India remained unanswered.

TOI first reported about Henkel AG and Spic planning to part ways to restructure the Indian business in its edition dated June 8, 2010. On January 20, TOI reported that the German parent was reviewing Henkel India, which could lead to a partial or full sale of the domestic operations. Henkel AG holds 50.97% stake in the India unit, which is listed on the local bourses. The domestic ally, AC Muthiah's Spic, has around 16% residual holding in the company.

Spic chairman AC Muthiah could not be reached for immediate comments. Muthiah is expected to go along with Henkel AG's decision to divest the assets and exit a nearly 25-year-old joint venture. Henkel India stock closed 4.98% up at Rs 31.60 on BSE on Monday.

Sources said investment bankers have had initial parleys with some of the obvious suitors in recent weeks. A detailed information memorandum will be pushed to the suitors for taking the sale process forward. Henkel India reported a Rs 483 crore revenue in fiscal year 2009 as per the filings with the stock exchanges.

Margo soap, Neem toothpaste and Chek detergent are brands that Henkel acquired from the erstwhile Calcutta Chemical Company almost a decade back. Margo is the biggest brand in its portfolio with an annual revenue of around Rs 95 crore. Sources said Godrej and Wipro could be more inclined to buy Henkel India's personal care brands as the latter's detergent and cleaning products portfolio has lagged behind global peers Unilever and Procter & Gamble significantly in the domestic market.

Initially, Henkel and Spic joined hands under a joint venture Spic Fine Chemicals, which was renamed as Henkel Spic India in the mid-90s. Subsequently, HSIL was merged with Henkel India (formerly Calcutta Chemical Co).