Deal to bring in Kesh King-branded ayurvedic hair oil, capsules and shampoo formulations
FMCG player Emami Ltd has raised around Rs. 900 crore debt to partially fund the Rs. 1,651-crore acquisition of Kesh King hair-care branded products from Sanjev Juneja of SBS Biotech.
This is the biggest deal for Emami so far. Earlier, it had acquired the controlling stake in Zandu Pharmaceuticals for around Rs. 700 crore.
“We have raised Rs. 800-900 crore through fresh borrowings. The balance is financed through internal resources,” Harsh Agarwal, Director, told BusinessLine .
Boost to bottom-line
The deal has brought in Kesh King-branded ayurvedic hair oil, capsules and shampoo formulations into the Emami-fold. Kesh Pari hair oil, an associate fighter brand, was also a part of the deal.
Justifying the high cost acquisition, Agarwal maintained that Kesh King products have a higher profit margin when compared to the existing products of Emami.
So far, the FMCG major’s portfolio (hair-care) include the “Navratna Cool Oil” and “Seven Oils in One” (a hair damage control offering).
The hair oil from Kesh King will be more or less similar to Emami’s Seven Oils offering, sources said.
But, according to Agarwal, Kesh King’s products are priced “higher”.
With ayurvedic only offerings in what the company calls an “affordable segment”, the brand competes with the likes of “Sesa” and “Anoop” in the hair oil segments.
Companies like Biotique, compete in the premium segment of the market with similar offerings across shampoos, hair-oils and conditioners.
National presence
According to Agarwal, these medicinal products have a strong presence in the northern and western regions.
The focus will be to expand the brand’s presence in eastern and southern regions by leveraging Emami’s distribution network. There would be no price revision either, he confirmed. The acquisition does not include takeover of any manufacturing facility.
Products will, at present, be sourced from SBS Biotech’s facility.
“We have decided to go in for contract manufacturing. However, we have an option of manufacturing the products in future,” he said.
There, however, are no “immediate” plans to re-brand Kesh King.
According to Agarwal, it will take some time before the company takes a call on the matter. Business Line
