Even as FMCG major Reckitt Benckiser India is integrating its business with Paras Pharma, Jyothy Laboratories (JLL) is scripting a turnaround strategy for Henkel India (HIL)?s loss-making business. To start with, Jyothy is planning to consolidate its advertising and media buying strategy for both companies and drive synergies in their distribution networks. It is also shifting Henkel India?s corporate office to Ujala House in Mumbai.
As part of its turnaround strategy, Jyothy is planning to relaunch Henkel India?s brands with new creatives and positioning in a phased manner. For the purpose, it is investing R80 crore in the first year. ?We are planning to curtail Henkel?s all sales promotions and offers to cut costs. We plan to stop the services of Henkel India?s current advertising agencies too,? said Ullas Kamath, deputy managing director, Jyothy Labs.
On the other hand, Reckitt Benckiser India is planning to continue with its existing advertising plans after acquiring Paras Pharma?s profitable business ?The brands have huge potential and we are currently making our plans to maximize their value for Reckitt. With our existing ad plans, we plan to add Reckitt marketing insights to take the brands to the next level,? said Chander Mohan Sethi, chairman and MD, Reckitt Benckiser India.
In a bid to change Henkel India?s fortunes, Jyothy has just kick-started an aggressive clean-up operation and revitalising programme. ?There will be a change in top management cadre. We plan to retain select middle managers handling brands and distributions. We are planning to increase retail prices across products appropriate to their positioning,? said Kamath. A few days ago, Jyothy acquired an 86% stake in Henkel India at the cost of R787.3 crore.
To revitalise HIL?s business, Jyothy plans to recruit a fresh field force of 200 sales persons. It is appointing a special task force at key positions in HIL. ?We plan to transfer our best sales heads to Henkel to drive transformation. Also, we plan to transfer all manufacturing to single low-cost contract manufacturer or Jyothi’s tax free facilities,? said Kamath.
In essence, JLL is expected to benefit from many synergies post merger like HIL?s complementary product profile, tax benefits and distribution and marketing synergies. Incidentally, both these companies operate in similar product lines of home care, fabric care, dish wash, personal care and household cleaning segments.