Elder Health Care to market VLCC’s male grooming products

Elder Health Care Ltd, the consumer products company of the Elder group, plans to expand its male grooming products portfolio and enter new segments, such as colour cosmetics.

The company is aiming at increasing its sales from Rs75 crore at present to Rs500 crore by 2010.

To begin with, Elder has teamed up with VLCC Health Care Ltd, which runs a chain of fitness centers and spas, to market and distribute the latter’s male grooming range dubbed, Fuel for Men, which includes shaving gels, after-shave balm and hair gels.

Revamp plan

“We will do a complete revamp and mass distribution of the Fuel range. We will modify the packaging and design and will even tweak the pricing suited for mass consumers, though it will be positioned as a premium product,” said Anuj Saxena, managing director, Elder Health.

He added that they will also introduce deodorants.

The company eventually plans to start manufacturing the entire range on its own.

Elder hopes to sell its products at around 300,000 retail outlets. The Fuel range is currently distributed via 135 VLCC outlets and some branded retail chains.

Elder Health already sells a fairness cream, Fair One. The brand, according to the latest data from market research firm AC Nielsen, had a 9% market share in November.

Elder’s other products include a mouthwash, the pain reliever, Tiger balm, Solo cough lozenges and Blistex range of lip care products.

In colour cosmetics and hair care, “we are in talks with a few European players to launch their products in India,” said Saxena.

Raising funds

To fund its expansion, the company may look at raising funds through diluting its stake at a later stage.

“We are in talks with a few private equity parties. But, we will not sell more than 10% stake,” said Saxena.

He, however, clarified that initially, the company will fund the expansion through internal accruals. “The option of raising funds will be explored later, not immediately,” he said.

India’s largest consumer products company, Hindustan Unilever Ltd, is the market leader in the skin-care category with a market share of around 55%. The segment, however, is increasingly getting competitive.

Growing segment

Last year, multinationals such as Procter and Gamble Co., L’Oreal India and Nivea India launched various high-end products while homegrown companies such as Wipro Ltd’s Wipro Consumer Care and Lightingunit and Dabur India Ltd are also planning to enter the market soon.

According to some estimates, only 22% of Indians use branded skincare products. The segment, however, has been growing 16-18% annually, according to a report by Credit Suisse, an international brokerage.

“Though the skincare market is getting crowded, VLCC’s brands are already known to consumers.

Besides, VLCC products are positioned as health care products and consumers today are showing more inclination towards products with health benefits. Elder can leverage this aspect and launch them into the mass market by lowering their prices,” said Anand Shah, an analyst at Angel Broking Ltd, a Mumbai-based brokerage.