In a surprise announcement, Jyothy Labs today announced that Henkel has decided not to renew the PRIL and Fa brand licence to Jyothy beyond May 31, 2026.
Background
In 2011, Jyothy had acquired Henkel’s India consumer business through a composite transaction covering brands, assets, and operations. As part of this arrangement, certain brands were licensed, while others were either perpetually licensed or fully owned by the Company.
- Pril and Fa were operated under fixed-term brand licence agreements with Henkel, with royalties and defined exit provisions.
- Mr. White and Henko continue under Perpetual Licence arrangements with no royalty obligations.
- Brands such as Margo, Neem Toothpaste, Tuhina, and Chek are fully owned by Jyothy Labs.
Jyothy and Henkel were engaged for months but could not reach an agreement for renewal of Pril and Fa’s licence.
Impact
- Fa was a small brand for Jyothy and hence no major impact because of that.
- Pril, however has been a significant brand for liquid dishwasher for Jyothy. Though it has been developing its own brand Exo for many years, but Pril continued to be the mainstay.
- Exact financial contribution of Pril has not been informed by Jyothy.
- Overall Dishwasher category contributed about 33-34% of Jyothy’s revenues and profits.
- Obviously, a significant part of this may get impacted in the near term. Jyothy would focus on pushing Exo to compensate for the loss. However, it would take couple of quarters to understand it’s success in doing so.
- In terms of the original contract, there is laid out process for this termination. This includes the process relating to the Business Transfer and determination of consideration that Jyothy may get for the work that it has done over the last 15 years on the brand. Exact quantum of consideration has not been disclosed for now.