IL&FS is said to have agreed to Rs100 crore infusion in Jyothy Fabricare Services Limited, the laundry business subsidiary of Jyothy Labs, maker of whitener Ujala and mosquito repellant Maxo
Jyothy Fabricare Services Limited (JFSL), a 75% subsidiary of Jyothy Laboratories Ltd (JLL), which is trying to pioneer laundry services in the organised sector, is getting a Rs100 crore infusion of funds from private equity players in two tranches. Moneylife learns that the private equity fund of Infrastructure Leasing and Financial Services (IL&FS) is taking a stake in Jyothy Fabricare.
At the end of the accounting year, 31 March 2010, Jyothy Labs had invested Rs3.75 crore as equity shares and Rs7.5 crore as convertible preference shares in JFSL, besides giving loans and guarantees to its subsidiary. JFSL also has personal investments by the promoters of JLL. According to those familiar with the deal, the deputy managing director of JFSL, Ullas Kamath, also has a significant stake in JFSL-probably about 25%. Mr Kamath, a chartered accountant by qualification, has been associated with Jyothy since its inception and has been on the board since 1997. He spearheads the laundry services business.
JFSL aims to offer "world-class laundry at an affordable price at your doorstep" and other related services. JFSL's bouquet of services include JFSL Corporate, JFSL rentals, Fabric Spa, Fabric Spa Busy-Easy and Snoways. It claims to have set up a "world-class facility equipped with world-class machinery and equipment, most-updated technology, supported by robust IT structure and housed in an area of 70,000 square feet, built on two acres of land at Doddaballapur, near Bangalore." This facility became operational in November 2009.
This is a much bigger and more determined attempt by Jyothy to enter the laundry segment. Jyothy had earlier launched Snoways chain of dry cleaners with the acquisition of eight retail outlets, which has now grown to 30, according to the company's 2010 annual report. In 2009-10, Snoways Launderers & Drycleaners Private Limited became a subsidiary of Jyothy Fabricare Services Limited.
It will take a while for the laundry business to start making money. For the year ended 31 March 2010, JFSL had a loss of Rs6 crore and Jyothy Labs advanced Rs12.16 crore as loan and Rs18 crore as guarantees to the bank on behalf of JFSL. These amounts would now possibly come back to JLL, increasing the stock's attractiveness.
The Jyothy Laboratories stock was down nearly 2% at Rs259 in morning trade today on the Bombay Stock Exchange.
Jyothy Fabricare is promoted by Jyothy Laboratories, which took the consumer market by storm over a decade ago with Ujala fabric whitener that taught multinational companies a lesson or two in branding, promotion and product innovation. Compared to other consumer products companies, Jyothy's range of products is limited, though it has gone on to launch brand extensions of Ujala for washing powder and a unique product stiff and shine. It has also launched a household insecticide brand Maxo, and utensil cleaners under the brand Exo. Set up in 1983 by MP Ramachandran, Jyothy Laboratories got private equity funding from Actis in 2002 and got listed in December 2007, at the height of the bull market. The stock listed at Rs179 and went down all the way to Rs42 in December 2008. From that level, the stock shot up all the way to a peak of Rs322 in October this year.
(Inputs by Alekh Angre)
Mumbai: Concerned over the possibility of repayment default by microfinance institutions (MFIs) to banks, the Reserve Bank of India (RBI) on Wednesday asked lenders to maintain funding lines to MFIs to prevent the problem from fanning out of Andhra Pradesh, reports PTI.
"The RBI sensitised the banks to the need to maintain funding lines to MFIs on merits to prevent a contagion," the central bank said in a release after meeting bankers and the Small Industries Development Bank of India (SIDBI) on the situation in the microfinance sector in Andhra Pradesh and other states.
The bankers informed the RBI that collections by MFIs in Andhra Pradesh have deteriorated considerably and there were some incipient signs of the problem spreading to other states.
"All of us understand the importance of the MFI sector and do not want it to fail. Hence, we met today for finding ways (to resolve the issue)," Indian Banks' Association (IBA) chief executive K Ramakrishnan told PTI after the meeting at Mint Road.
Although there has been no default in repayment obligations to the banks by the MFIs till November 2010, the release said, "Going forward this (repayment) may be a matter of concern."
The problems in the microfinance sector erupted after the Andhra government imposed restrictions on activities of the MFIs following spate of suicide by harried borrowers.
At the meeting, the banks urged the RBI to work out interim arrangement to deal with the problem. They suggested that the banks be allowed to reschedule exposures to MFIs, subject to the condition that such institutions reduce exposure and scale down growth projections.
Besides, the lenders also demanded regulatory concessions for averting any crisis and preventing contagion spreading to other states.
"The general view of the banks was that...some interim measures may be required to address the gap between the recoveries by the MFI and their payment commitments to banks," the release said.
Mr Ramakrishnan added that a proposal to restructure MFI accounts on the lines of the concession given to the crisis-hit aviation sector has already been submitted from the bankers' side.
As regards the structural issues of the microfinance sector, the release said, it would be addressed by the Malegam Committee in due course of time.
This late entrant in the mobile services business uses more outlandish advertising to sell its first Android phone in India
Micromax is the latest mobile company to dive into the 'Android' bandwagon. This late entrant brand usually does outlandish advertising in its need to be heard over the mobile din (recall that blood curdling Akshay Kumar laughter?). And it's not very different with its android campaign. There are a slew of commercials on air, and I have watched four.
One commercial features a vagabond, unclean, tattoo-wearing, very hairy hippy. He's out for an urgent image change, and shops for decent clothes and goes in for hair and tattoo removal. So what's with the sudden makeover? Well, it's to keep his dad in good spirits, as the ol' man is all formal and clean. Here's the thought: The chap is trying to patao his dad into purchasing him a brand new Micromax Android. And all this image change business is purely a trick to achieve that.
Other creatives follow the same path. In one, a young dude gets himself a job as a tourist guide and finds himself with a rather noisy busload of travellers, all to make that extra dosh to buy himself the Micromax Android. Another one plays a chef in a restaurant to make the extra income. He is seen weeping as he slices the onions. Though my hunch is the tears are more because of the current prices of onions! In yet another commercial, a young lass gets hired as a baby-sitter for a really bratty child. One of those 'Omen' kind of kids. All for the same cause, of course.
Here are the plus points of the campaign: Thank god we don't get blinded with android's scientific features… we have already been assaulted with that before and frankly, that's not the job of TV commercials. They've stuck to entertainment and that's the correct strategy. Next: Broke kids desperate to get their hands on the latest tech will identify with these situations. And will enjoy the tongue-in-cheek approach. Though one really hopes they don't take all this seriously and attempt criminal and immoral deeds for the extra bucks!
Having said this, here's a slightly dangerous angle to this otherwise well-conceived idea: The commercials subliminally suggest that Micromax Android is a rather expensive gizmo, and needs excess monies for purchase. This may actually scare some potential buyers away, even before they've stepped into a mobile store. And Akshay Kumar certainly won't be laughing if that happens.