Marico Industries Ltd, the company behind coconut oil brand Parachute, edible oil brand Saffola and hair-care product Mediker, said on Monday that it will hive off its Kaya Skin Care chain of beauty clinics as a separate entity to demerge the loss-making beauty business from the other fast moving consumer goods (FMCG) lines.
“The demerger provides the group an opportunity to pursue both the streams with a clear focus,” said Harsh Mariwala, chairman and managing director, Marico.
“Both the businesses will receive individual focus and this is an attempt to give them each a clear direction. We see great potential in the Kaya business and this move is a newer experiment to make it big.”
The new private entity will be called Marico Kaya Enterprsies, or MaKE.
Marico shareholders will get one share of MaKE of a face-value of Rs.10 each at a premium of Rs.200 per share for every 50 shares of Marico with a face value of R1 each they hold.
Kaya has been ailing since launch in 2002, dragging down the financials of the group.
“Kaya has been a loss making entity and it will take a while for the company to do a turnaround. It converts the flagship Marico into a pure fast moving consumer goods firm while improving the focus on the beauty business,” said industry analyst V Srinivasan of Angel Broking.
Kaya’s contribution to Marico’s Rs.4,008 crore revenues in 2011-12 was Rs.279 crore. The company has 107 Kaya Skin Clinics across India and West Asia.
Saugata Gupta, who currently heads consumer products business will lead the overall FMCG Business as the CEO.
Vijay Subramaniam who currently heads the international FMCG business would be appointed as Kaya’s CEO after the demerger.
Marico shares were up 1.36% at Rs.227.45 at the end of the trading session on the BSE.