With this acquisition, which is effective September 25 this year, HLL's overall market share has increased to over 20 per cent. HLL, with its coconut oil brand Nihar, is currently the second largest player with a 14 per cent share in value. The market share of Coco Care is 8 per cent.

The acquisition thus brings HLL a step closer to market leader Marico Industries whose Parachute brand coconut oil commands a 53 per cent market share.

While the companies are tight-lipped on the price at which the acquisition has taken place, industry sources peg the figure at over Rs 40 crore.

According to press release issued by HLL, the agreement does not involve purchase of any manufacturing facilities and distribution assets, or transfer of employees of Recon Oil.

Industry sources said that Marico was also in race to acquire Coco Care. The acquisition of the brand was crucial to Marico in further strengthening its leadership position.

Reacting to the news, the HLL share price gained Rs 43 on the BSE to close at Rs 2,592 on Monday as against Friday's close of Rs 2,549.

Commenting on the deal, Recon's managing director Iqbal Ahmed said, ``We have sold the brand to HLL, because we believe that the coconut oil market will be increasingly competitive with HLL's strategy to increase its market share in the large coconut oil market. Recon's management believes that Coco Care will be in very good hands with HLL, who are well placed to expand its market share further.''

Alok Vajpeyi of Vector Advisory Services Ltd was advisor to Recon. After having sold off its flagship brand to Levers, the Recon management plans to consolidate its position in the edible oils market.

Coco Care is the second largest brand in the western region which forms 24 per cent of the overall market in value. In this region, Coco Care has a share of 22 per cent.

Ever since Nihar was relaunched by HLL, the brand has eaten into the market shares of locally strong brands like Coco Care, say analysts. Even as the marketing push behind Nihar could not make a dent into Parachute's share, it has managed to muster share from other local brands. The market share of Coco Care has since dropped from around 10 per cent two years back to 8 per cent today. At the same time, Nihar's has risen rapidly from 8 per cent since its relaunch two years back.

Close on the heels of Nihar, is the Shalimar brand with a share of roughly 12 per cent in value. Industry analysts feel that Marico will have to rework on its overall strategy in order to combat HLL. Since brands in this market are largely localised, the company would need to formulate specific strategies for different regions. ``Marico will have to be more smarter,'' an analyst who tracks the company closely, said.

In terms of leveraging on the benefit of a good brand presence in the rural market, HLL will have to develop the same on its own as Coco Care does not have a substantial rural presence.

While the multinational's strategy in this market is unclear at the moment, analysts said that going by Lever's strategy of having a multi-product portfolio, there is a possibility of Nihar being positioned as a premium brand and Coco Care as the popular one. An HLL spokesperson said that strategies will be formulated after identifying the positioning of the two brands--Nihar and Coco Care--which will be different.

A few analysts feel that the straight gain in market share for HLL does not mean having built a clout in a commodities business like coconut oils where raw material costs, unlike other businesses, accounts for a huge 85 per cent. An analyst said that while HLL has good marketing expertise to promote its brands, the experience of Marico in raw material purchases remains unmatched.

The loose oils market is estimated to be around Rs 700-800 crore in value. The total coconut oil market is thus valued at Rs 1,300 crore, of which the branded coconut oil market is valued at around Rs 500 crore. Thus there is huge scope for conversion to the branded.