HLL has entered into an agreement with Johnson & Johnson for using the trademark `Savlon' for its soap products. According to a HLL spokesman: "The agreement was entered into eight months back and concerns only soaps." HLL does not plan to extend the Savlon brand to other basket of products, he said.

Sources said that HLL will be paying an annual royalty on sales of Savlon soap to Johnson & Johnson for using the trademark. Although Savlon is an international brand owned by Johnson & Johnson, the deal is specific to the domestic Indian market.

Both Johnson & Johnson and HLL will manufacture and market their respective Savlon branded products. Johnson & Johnson will continue to manufacture and market Savlon liquid antiseptic.

HLL will advertise and market its soap product under the Savlon brand. The logic behindthe deal, sources said, is that HLL's financial muscle in promoting the Savlon soap brand will also provide the required impetus to Johnson & Johnson's existing range of Savlon products.

Although HLL has an existing soap with anti-bacterial properties in Lifebuoy, the company did not want to extend the brand equity of Lifebuoy to that of a medicated soap. Thus, the need to introduce a soap with medicated properties was felt by the multinational.

The total market volume of toilet soaps is 5.2 lakh tonnes valued at Rs 2,900 crore. HLL leads with a 65 per cent market share followed by Nirma at 15 per cent and Godrej Soaps at 8 per cent.

The medicated soaps range is a niche area in the toilet soaps market. Barring some smaller brands promoted as medicated soaps, Dettol is the only big player in this segment.

With Levers now foraying this segment of the market, Reckitt & Colman and HLL would be competing on various fronts. Reckitt's Lizol floor cleaner competes head-on with HLL's Domex and so doesReckitt's Mortein mosquito repellent with Lever-Johnson's Raid.

The agency for Johnson & Johnson's Savlon antiseptic liquid, Lintas, is also working on the advertising promotion for HLL's new soap brand. Sources said that the new ad campaign for Savlon Soap will be kicked off shortly.