Ever heard of Oral B in the recent news? How many times have you seen the Tide advertisement on Television? Well, it was made by a small Delhi based FMCG manufacturer, JHS svendgaard Laboratories.
Let’s dig up a little history?
JHS svendgaard Laboratories, became a prominent name in the news in FY10. It has doubled its sales and received a huge contract from one of the global FMCG leaders P&G. The contract was to manufacture toothbrushes, detergent and toothpastes under brands Oral B and Tide. The deal was huge and hence a small manufacturer needed capital investment. With expectations of high revenues for the coming years (long-term), JHS svendgaard used Debt to invest more than RS 100 crores in Himachal Pradesh.
Those were the days when P&G was aggressively battling it out with other global players. Hence, when they added the clause that did not allow JHS to accept contracts from any other brands, JHS happily complied.
What went wrong for JHS?
A single contract from one brand, high debt, and low revenues created problems for the manufacturer. P&G was facing a lot of failed expectations and had to pull out its toothpaste from the markets in 2016. During this whole time, JHS has its plants lying idle and it suffered losses for 3, consecutive years, with the last one, FY14 amounting to Rs 28 crores.
FY16, the year of balance?
JHS recovered a few years back. It accepted compensation from P&G to clear of loans. It sold it’s detergent manufacturing facility as well. All this amounting to approximately Rs 46 crores allowed them to float safely after clearing of loans and dues.
Patanjali to save the future, maybe?
JHS was already manufacturing Toothpastes for the brand that now echoes in every Indian household. However, luck seemed to work out for both these companies.
Patanjali Dant Kanti was looking for a toothpaste manufacturer and JHS has a huge unit ready to help. This contract has now led to almost 30% of their total revenue. JHS has also partnered with Patanjali to open exclusive retail stores to see the latter’s products at various airports.
Considering the rising market value of Pantanjali and constant need to outsource manufacturing, it is probably correct when Nikhil Nanda, Managing Director at JHS Svendgaard gives credits to Baba Ramdev for saving the company!
