Navneet gets rights to its brands...for free! - Views on News from Equitymaster

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Navneet gets rights to its brands...for free!

Sep 3, 1999

According to newspaper reports, the Gala family, promoters of Navneet Publications Limited, has decided to transfer three of its most popular brands-Navneet, Vikas and Gala to the listed company (Navneet). The promoters are transferring the brands at a nil consideration. Navneet Publications (NPL), setup in 1959, is a leading player in the educational publishing industry. It commands a 55 per cent share in the organised market in Gujarat and Maharashtra. The company directly services 40,000 schools and has a strong distribution network of 13,000 wholesalers.

The decision by the promoters to transfer the brands to NPL is likely to put an end to certain uncertainities regarding its future existence. In the absence of such a development, the company would have to regularly renew its rights to use the brand names. There would thus be a perpetual fear that the promoters might refuse to renew the rights (for some reason) or demand higher license fee. Such developments would have had a direct bearing on the NPL's future.

The fact that the transfer has been done without any demands for consideration is likely to go a long way in improving the fundamental strength of the company.

Market View:
Analysts have rated the stock as a 'BUY' mainly on account of the company's dominant position in key markets, strong brand name and well developed distribution network.

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