Marico planning a turnaround strategy, spinning off Kaya Skin

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The Managing Director of Marico, Harish Mariwala, is known for his business risks and is a person who celebrates failures. The Kaya skincare business was spun off as a subsidiary recently as part of a long term strategy of Marico. The Mariwalas entered the skin care business back in 2003 when the company was cash-rich and could afford risks.

Eager to enter the retail sector, the company chose skincare business as hiring a dermatologist was considered an economical affair in India. Marico then went on to do a market research and took a 24 per cent stake in Kaya Skincare Solutions which was owned by Adil. The company subsequently bought the skin clinic.

A decade after floating the business, Marico has now spun off the Kaya as a subsidiary naming it as Marico Kaya Enterprises (MaKe). This is a move by the company to give a fresh look to its business. The company is enthusiastic about this restructuring venture and is trying to consolidate its FMCG business with this move.

Kaya contributes seven per cent to Marico’s total revenue which is a whopping Rs. 4,000 crore. Kaya’s profit has improved after suffering a loss in the previous financial year. Kaya has 107 clinics in total out of which 82 are in India and the rest abroad. The company had been growing steady in its skin care solution offerings and dermatological services.

Skin care business is something relatively new for Marico, but the company claims it has made no mistake by stepping into this segment. Kaya was shadowed by Marico’s policies earlier and witnessed some of the worst employee exits including the Managing Director of the concern. With the demerger of Kaya from Marico, a new face of business is opening up.

Marico’s stocks have been performing well after the recent demerger, and it is expected to improve. Marico shareholders will be further issued a stock of Marico Kaya Enterprises which is valued at Rs. 10/- each. The company as of now is concentrating on improving its products and also trying to introduce new products to make its stand strongly felt in the FMCG sector.

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