Sexual wellness brand Japani up for sale
Promoters of its owner, Uttarakhand-based Chaturbhuj Pharmaceutical Company, want Rs500 crore for Japani, say two people close to the development
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Mumbai: Japani, a leading Ayurvedic brand in the sexual wellness category in India, is up for sale. Promoters of its owner, Uttarakhand-based Chaturbhuj Pharmaceutical Co., want Rs.500 crore for it, said two people close to the development.
The brand has a presence in Uttar Pradesh, West Bengal, Bihar and Rajasthan.
Anand Rathi Investment Banking has been hired to find suitable buyers, said one of the two people cited above, both of whom spoke on condition of anonymity.
Chaturbhuj had revenues in the range of Rs.60-65 crore and an Ebitda (earnings before interest, taxes, depreciation and amotization) of about Rs.35 crore in fiscal 2016, said the first person.
Japani competes with Dabur India Ltd, Zandu Ayurveda, Shree Baidyanath Ayurved Bhawan Pvt. Ltd, Kunnath Pharmaceuticals Ltd’s Musli Power and Shree Maruti Herbal’s Stay On in the herbal energy boosters category.
The Japani range of products comprise oils and capsules for men and women. They are priced in the range of Rs.170-300.
Chaturbhuj, promoted by Murari Sharma and set up in 2005, sold its Kesh Pari brand of Ayurvedic hair oil to Sanjeev Juneja’s SBS Biotech Ltd, makers of Kesh King, in 2014. Last year, Juneja sold Kesh King and Kesh Pari to Emami Ltd for Rs.1,651 crore.
Sharma confirmed that an investment banker had been hired for the sale of Japani. “Though we plan to sell controlling stake, we have not yet decided on the size of the stake to be diluted,” he said.
A spokesperson from Anand Rathi declined to comment.
“Though Japani has a presence in three-four states, the promoters are not interested in further expansion, which needs a huge capex,” said the second person cited above.
Chaturbhuj is not alone. Kerala-based Kunnath Pharmaceuticals plans to sell Musli Power for Rs.125 crore and is in discussions with private equity (PE) fund Everstone Capital, The Economic Times (ET) reported last year. In 2011, Dabur acquired over-the-counter energizer brand “30-Plus” from Mumbai-based Ajanta Pharma Ltd.
The organized market for sexual wellness drugs in the country is estimated at about Rs.555 crore by fiscal 2016 and is growing at 10% every year, as per data from the All-India Organization of Chemists and Druggists, the largest body of chemists in the country.
“Regional brands have a strong mind share and hence wallet share of Indian consumers in respective geographical regions. To replicate similar sustainable business in other regions would require effective marketing/advertising spend and management bandwidth. Further, such investment may not yield desired results. Hence, regional brands prefer partnering with national players with pan-India presence or MNCs seeking entry into India,” said Narayan Shetkar, director at boutique investment bank Singhi Advisors.
Regional brands in the consumer space have become attractive acquisition targets in India in the last couple of years. The inability of promoters to pump in money for further expansion into new geographies makes them sell the brands to larger national firms who are keen on entering newer markets.
Large sell-outs by regional companies include the $260 million (Rs.1,651 crore) acquisition of Himachal Pradesh-based hair and scalp care brand Kesh King by Emami, the Rs.330 crore acquisition of Kerala-based Indulekha hair oil by Hindustan Unilever Ltd and the $100 million PE investment by CX Partners Llp in Ludhiana-based biscuit maker Cremica Food Industries Ltd.
“Historically, India has displayed some of the lowest penetration rates for most consumer categories across the world. Having said that, over the last few years, there has been a visible shift in trend and some categories like grooming and personal care products are showcasing fast improving long-term developments,” said Akshay Deshraj, director at advisory firm Grant Thornton India Llp, in the July Grant Thornton Dealtracker report for the first half of 2016.
In the first half of 2016, the fast-moving consumer goods and retail sectors witnessed 17 M&A (merger and acquisition) deals amounting to $182 million and 13 PE investments amounting to $145 million, the report said. The year 2015 witnessed M&A deals worth $2 billion in retail and consumer segments against deals worth $3.6 billion in 2014 and 2013, according to Grant Thornton data.