Detergents baron Karsanbhai Patel is altering his group structure. His flagship, Nirma Ltd, is buying back two main brands, Nirma and Nima, from the unlisted group company, Nirma Industries.
At the same time, the soap stone manufacturing activities of Nirma Industries, earlier known as Nirma Chemical Works, will be merged with Nirma Ltd.
The group had earlier in the late 1990s come under severe criticism from investors for hiving off the Nirma and Nima brands to Nirma Industries.
"Owing to the brands' improved market share, Nirma is likely to pay a high price for the brands now," an FMCG analyst said.
Senior Nirma executives said the company had appointed consultants to arrive at a valuation of the brands, but refused to divulge further details.
Nirma Ltd currently gives Nirma Industries a 4 per cent royalty on sales of the Nirma and Nima brand products. The brands are also licensed to Nirma Consumer Care, a wholly owned subsidiary of Nirma Ltd.
Nirma Consumer Care is the sole licencee of the brands within India and is engaged in the marketing of the brands. On the other hand, exports and canteen sales are handled by Nirma Ltd.
Analysts point out that this is a positive move for Nirma Ltd, since it would no longer have to pay Nirma Industries a royalty. "The company is undertaking a consolidation of operations in line with similar moves by other domestic companies such as Godrej Consumer Products and Marico Industries," analysts said.
Despite Nirma's market share of around 40 per cent, its share price is not getting a good valuation on the bourses.
Revamp time
- In the late 1990s, the Nirma group came under severe investor criticism for hiving off the Nirma and Nima brands to Nirma Industries.
- Nirma gives Nirma Industries a 4 per cent royalty on sales of the two products.
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Nirma Consumer Care is the sole licencee of the brands in India and is engaged in the marketing them, while exports and canteen sales are handled by Nirma Ltd.
