Mumbai: The owners of Sesa Hair Oil, a popular hair care brand in west and north India, have failed to find buyers willing to match their price expectations.

Gujarat-based Ban Labs, which sells the Sesa hair care brand of shampoo and conditioners, hair care treatment and herbal hair care, is looking for around 1,200 crore, said two people familiar with the deal. They added that potential buyers remain reluctant to buy the brand at that price.

The brand has been on the block for more than six months and Ban Labs has held discussions with FMCG companies including Marico Ltd, Bajaj Corp. Ltd and Wipro Ltd’s consumer goods arm Wipro Consumer Care and Lighting.

Deloitte is advising Ban Labs on the sale of the brand.

“The brand Sesa had revenues of 130 crore and Ebitda (earnings before interest tax depreciation and amortisation) of 75 crore for the first six months of fiscal year 2016. Expectations are that the brand would close the fiscal year 2016 with revenues of 225-250 crore and Ebitda of 100-125 crore," said a top executive from an FMCG firm, who did not wish to be identified.

Sesa is a strong No. 2 in the anti-hair fall category with 23% market share, said the executive quoting Nielsen data for the calendar year 2015. Kesh King, which was acquired by Emami Ltd, is the market leader in this category with 30% market share. Sesa has a strong presence in Gujarat and Maharashtra.

Anti-hair fall oil is a 1,000 crore category and is also the fastest growing segment within hair oils, said the same executive, citing Nielsen’s numbers.

Established in 1996, Ban Labs also sells other brands such as Charm & Glow (cosmetics), Caley (soaps and bar) and Drs Care (detergent and dish wash).

Emails sent to Ban Labs managing director Maulesh Ukani last Tuesday went unanswered. A company spokesperson said senior officials were travelling and hence unable to respond. A mail sent to a Deloitte spokesperson was not answered.

“The FMCG sector is going through consolidation as regional brands are increasingly coming up on the block. With the sale of Indulekha and Kesh King, sellers are hopeful of getting good brand valuations and for buyers, there is a need to consolidate and increase their market share," said Ritesh Chandra, executive director, head-consumer, financial institutions group and business services group, Avendus Capital Pvt. Ltd.

The hair oil category is seeing renewed interest from multinationals and domestic companies as it is one of the largest segments in the hair care space. In December, India’s largest consumer packaged goods company by sales Hindustan Unilever Ltd re-entered the hair oil segment by acquiring Kerala-based hair oil brand Indulekha for 330 crore. HUL had exited the hair oil business by selling its coconut oil brand Nihar to Marico Ltd in 2006. L’Oreal India Pvt. Ltd has launched a hair oil range 6 Oil Nourish under its L’Oreal Paris brand.

Even domestic firms such as Emami Ltd have taken a position in the segment through an acquisition. In June, Emami acquired Kesh King from Himachal Pradesh-based SBS Biotech Pvt. Ltd for 1,651 crore. Kesh King had sales of 300 crore in 2014-15.

Patanjali Ayurved Ltd has also entered the hair oil category and incumbents such as Bajaj Corp., Marico and Dabur India Ltd will increase the spends to defend their shares.

“Buying Sesa makes sense for companies like Bajaj Corp. and Marico as it will help them increase their market share in markets where Sesa is strong," said the second person.

Marico and Wipro did not respond to emails. A Bajaj Corp. spokesperson declined to comment.

“Patanjali has been successful in establishing a brand name for itself within the hair oil market on the back of its herbal, natural and ayurvedic positioning. Furthermore, the leading companies within hair care are preparing to counter any threat from Patanjali and are adding herbal brands to their portfolio," said Shreyansh Kocheri, research analyst at Euromonitor International.

According to Nielsen data, the hair oils segment in India is valued at 9,900 crore.

Revenue from the anti-hair fall market contributes 8% of the total hair care market in India and is growing at 7% annually, said Nielsen data. Pure coconut oil is the highest contributor and accounts for 35% of the segment.

“Indian consumers continue to believe in the fundamental value of nourishing hair via the traditional method of using hair oil. The category has grown at 7% over the last year. This is largely due to the fact that the industry has kept pace with the evolving needs of the consumers who today while needing hair nourishment, also need fuss-free application—segments like non-sticky hair oils, value-added coconut oils, hair fall and styling are driving the growth of the category," said Vijay Udasi, senior vice-president, Nielsen India.

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