Indian consumer products maker Jyothy Laboratories has raised Rs 5.5 billion ($110 million) through a 5-year-loan from Axis Bank to refinance part of the debt it incurred to acquire a controlling stake in the Indian unit of Henkel AG, Managing Director Ullas Kamath said.
Jyothy acquired a 51 per cent stake in Henkel India last year for Rs 5.7 billion, including debt.
“The fundraising is largely to meet our short-term debt requirement,” Kamath told Reuters on Friday.
The loan, which has a floating interest rate of 11.25 per cent, has a principal moratorium period of 18 months, he said. Axis Bank’s base rate, the minimum rate it charges its customers, stands at 10 per cent.
For the Henkel India buyout, Jyothy Labs took on short-term debt from ICICI Bank, Kotak Mahindra Bank and Axis Bank, two sources with direct knowledge of the matter told Reuters.
The company had intended to raise funds through a private equity deal, but has put that plan on hold because of poor market conditions, one of the sources said.
Jyothy is known for its Ujala range of fabric care products, and has the largest market share in that category in India.
“We wanted to focus on Henkel integration,” Kamath said.
Last June, sources told Reuters that Jyothy Laboratories is in talks with a bunch of private equity investors including Actis, Apax Partners, the Carlyle Group and Baring India Capital to raise about $150-$200 million.
M-Cap Fund Advisors, a private equity fund managed by former Baring India partner Subbu Subramaniam, has picked a little more than 1 per cent stake in the company in a secondary market transaction.
Jyothy Labs will look at equity dilultion at a later stage, when the market condition improves, said the other source.
Last week, Jyothy reported a 78 per cent jump in its net profit for the quarter ended December 31, 2011..
Shares of Jyothy Labs closed 1.16 per cent higher at Rs 165.70. The benchmark index closed 0.78 per cent higher.
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