Mumbai: Hindustan Unilever Ltd (HUL), India’s largest maker of consumer products, is in advanced discussions with Mosons Extractions Pvt. Ltd to buy the Indulekha brand of hair care products, including an ayurvedic hair grooming oil and shampoo, for around Rs.500 crore, according sources close to the development.
Several companies, including Wipro Consumer Care and Lighting and L Capital Asia Advisors Plc. (an Asian PE fund sponsored by Moët Hennessy Louis Vuitton SA, dropped out of the race to acquire Indulekha citing valuation-related concerns, The owners of Mosons Extractions wanted Rs.600 crore for the brand, added the sources.
HUL to buy Indulekha to make a re-enter the lucrative market for hair grooming oils. The company exited the business in 2006 by selling its coconut oil brand Nihar to Marico Ltd. Smaller rival Emami Ltd, the maker of Emami Navratna hair oil, strengthened its position in the Ayurvedic hair oil business with the purchase of Kesh King brand for around Rs.1,650 crore earlier this month.
Kesh King, a brand owned by the Chandigarh-based SBS Biotech Ltd, was valued at more than five times its annual sales of Rs.300 crore. In comparison, Indulekha, a popular brand in South India, has an estimated annual sales of Rs.150 crore, according to a November report.
HUL to buy Indulekha brand, including Bringha Ayurvedic Hair Oil, Bringha Selfie Bottle Hair Oil, Coconut Milk Shampoo, skin care oil, skin care cream and Acrot Natural Face Mask.
The coconut-based hair oil market accounts for 43% of the Rs.8,700 crore overall hair oil market in India, the second person said.
Investment banking firm Anand Rathi Financial Services Ltd is advising Mosons. “We will conclude a deal with a potential investor after reaching a consensus on valuation of the brand,” said Afnas P., chief executive officer of Mosons Extractions. He declined to share further details.
Hair care was a Rs.17,102 crore market in India in 2014, Bajaj Corp. said in an investor presentation, citing figures provided by market researcher Nielsen. Out of this, shampoo was the largest segment at Rs.5,217 crore, followed by perfumed oil at Rs.4,996 crore and coconut oil at Rs.3,786 crore.