Henkel bullish on Indian cosmetic market - Views on News from Equitymaster

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Henkel bullish on Indian cosmetic market

Mar 29, 2000

Henkel Spic has aggressive plans in the personal products sector. The company launched the Fa range of soaps and talc, which is the second largest brand in the parent company’s portfolio. Henkel Spic, a 54% subsidiary of the $ 12 bn German consumer products major Henkel is engaged in the manufacture of eco-friendly detergents (surface cleaners and laundry). The other co promoter of the company is the Spic group. Among the products introduced by the company are Brisk, Henko, Limeshot and Pril.

The company has traditionally had a history of entering into a market only after the initial seeding has been done. It has allowed mass marketers such as Unilever to build the market and only when the market is poised to take off does the company enter the market aggressively. This is primarily since quite a few of the company’s products are at a premium end.

Henkel has followed a similar strategy in India. It successfully launched its ‘Henko’ brand which is among the highest priced among the premium end detergents, despite a 90% penetration level of detergents in the Indian market.

It has now launched its top end cosmetic and toiletries at a time when the Indian personal product’s market has been growing at 20% plus over the last three year’s and is expected to do so in the current year too.

The aggressive launch of new products from its international stable and the raising of its equity stake in the joint venture recently are an indication of Henkel’s growth perception of the Indian market.

Market View:
The raising of the parent’s stake and the expected repayment of the debt along with aggressive new product launches are likely to shore up the sentiment in the stock. Analysts expect the company to report a turnover in the range of Rs 35 bn although it is unlikely to wipe out its accumulated losses in the current year itself.

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