Under separate press releases issued on late Monday evening, the companies also announced a distribution tie-up, as per which Marico will distribute some of P&G's brands such as Old Spice and Clearasil. The distribution agreement which comes into effect on July 1, 1999, will help Marico to further develop and leverage its distribution competency, say analysts.The sale of Mediker comes almost a year after P&G divulged its intentions to divest the Mediker business in India. The deal, say analysts, took a long time to conclude owing to a delay on the part of two companies to arrive at an agreement on the price.

The divestment of the Mediker business is a result of a re-look P&G took at its businesses which revealed that Mediker did not fit with the long-term strategic plans of the multinational.

P&G has always held the opinion that brands such as Old Spice, Clearasil and Mediker do not have high market potential.

Considering that sales of Clearasil and Old Spice crashed by 13 per cent in 1997-98, the brands deserve less share of the marketing pie, analysts concur.P&G had earlier divested detergent brands Ezee and Trilo to Cussons India.The distribution agreement comes in the wake of P&G's decision last year to focus on all its financial and other resources in growing the Whisper and Vicks businesses as they offer the greatest growth opportunities in the future. Old Spice is a men's toiletry brand, while Clearasil is an anti-acne cream.

According to the Marico press release, the additional throughput from the distribution agreement is expected to help the company towards a wider and more cost-efficient distribution network, especially in the one-lakh plus population towns. As part of an organisational restructuring last year, Marico had created a separate division for its sales and distribution function. This was done so as to impart a sharper focus. This was followed by a marketing and distribution alliance with Indo Nissin Foods, for instant noodles under the brand "Top Ramen" and "Cup Noodles".According to Dalal & Broacha Stock Broking research head Milind Karmarkar, "It is a win-win situation for both the companies. While for P&G, the distribution deal will considerably bring down distribution costs, Marico will get to distribute global brands. The brands will also get better visibility, which will translate into higher sales."