MUMBAI, March 3: The last step in the takeover of the Tatas-owned Lakme cosmetics business by Hindustan Lever has been taken with appointment of valuers S B Billimoria & Co and HDFC to assess the value of the manufacturing facilities of Lakme.The valuers are expected to submit their report soon, following which the exact price to be paid (in addition to the Rs 200 crore already paid by Levers for the cosmetics marketing and distribution rights as well as the Lakme brands) will be ascertained.
Hindustan Lever announced the takeover of Lakme's cosmetics business two weeks ago, through purchase of the Tata group's 50 per cent stake in a joint venture called Lakme-Lever Ltd.
Lever paid up Rs 130 crore, and an additional Rs 70 crore worth of outstanding debentures were redeemed, making the total outgo Rs 200 crore.
It is believed that Levers may not manufacture its entire requirement as the brands grow further, and keep alive the option of outsourcing the manufacturing.
The Lakme cosmetics business isthe country's largest in the segment. In fact, in a simultaneous manouever, the merger of Ponds India Ltd, Unilever-owned associate, into Hindustan Lever, has created a giant in personal products, outstripping every other competitor.
The Indian cosmetics industry caters to a Rs 1,500 crore market which is growing at 25 per cent annually.
Manufacturing is an important issue in the Levers cosmetics gameplan, because it will have to compete with both official foreign presence in the industry, as well as large scale imports. Important foreign names such as Oriflame, Avon, Revlon, Amway and Benckiser. Lakme brands enjoy over 50 per cent market share in colour cosmetics, a Rs 200 crore sub-segment within the Rs 1,500 crore cosmetics business.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
