Godrej, Kiwi part ways as Sara Lee ends licence
Godrej Household Products Ltd (GHPL) said on Thursday that it would no longer own and sell shoe care brands Kiwi and Kiwi Kleen after US-based Sara Lee Corporation, the parent of Kiwi brands globally terminated the licence for Godrej. Vivek Sinha reports.business Updated: Mar 24, 2011 22:00 IST
Godrej Household Products Ltd (GHPL) said on Thursday that it would no longer own and sell shoe care brands Kiwi and Kiwi Kleen after US-based Sara Lee Corporation, the parent of Kiwi brands globally terminated the licence for Godrej.
As a consequence of this termination, Sara Lee would pay Rs 177 crore to GHPL. GHPL is a 100% subsidiary of Godrej Consumer Products Ltd that owns personal care brands such as Cinthol soaps.
"The development will help us focus on our core categories, which are personal care, hair care and home care. Shoe care is not a core business for us," said Adi Godrej, chairman, Godrej Consumer Products Ltd.
He added that these brands (Kiwi and Kiwi Kleen) belong to Sara Lee Corporation and after they sold their shoe care business to SC Johnson its logical that these brands goes to SC Johnson.
"Sara Lee has every right to do so but as per the agreement they had to pay us a value of the brands in India because we developed the Kiwi brands. The payment of Rs 177 crore to this effect will be booked as profits in the books of Godrej Consumer Products Ltd," said Godrej. SC Johnson is a US-based company that manufacturers household products.
Godrej added that GCPL is negotiating with SC Johnson to supply them the Kiwi products from Godrej-owned factories. "Though the Kiwi brands will be owned by SC Johnson but we may continue to manufacture and supply them from our factories," said Godrej.
The Kiwi brands brought in Rs 40 crore revenues for GCPL, which the company would concurrently loose. "We may still get some turnover if we supply the Kiwi products to SC Johnson from our factories."
In May last year GCPL had acquired 51% stake of Sara Lee in their joint venture Godrej Sara Lee, which was subsequently re-named as Godrej Household Products Ltd.