Valsad: Procter & Gamble Hygiene and Health Care Ltd (PGHH) has terminated its three-year distribution alliance with Marico Industries for its Old Spice, shaving cream, lotion and talcum powder, Pampers diapers and Ariel detergent cake.

At the same time, PGHH announced its decision to license the Old Spice trademark and business to the Goa-based Menezes Cosmetics Pvt Ltd for an undisclosed fee with effect from December 1, 2002. Pampers will be distributed by P&GHH and Ariel by P&G Home Products.

The agreement with Menezes Cosmetics covers a period of ten years and is limited to the Old Spice business in India covering after shave lotion, shaving cream and talcum powders under the Old Spice brand, according to the company.

Menezes Cosmetics is part of the 92 year-old CMM Group of Companies, which introduced Old Spice in India in 1969 and marketed it till 1993.

At present Menezes Cosmetics markets body sprays, aftershave lotions and shaving creams under the XM brand in India. Old Spice is viewed as a strategic fit for the company due to its business focus on the fragrances category.

This move will impact PGHH''s sales to the tune of 3 per cent (Rs 16 crore annually) but will not impact its profitability since the estimated license fee revenues are expected to be higher than the profits currently generated by PGHH on the Old Spice business, according to the company.

PGHH intends to focus on its core categories in India, feminine and health care. Old Spice does not fit into the above categories and MCPL will be able to realise the full potential of Old Spice," said Bharat Patel, chairman of PGHH.

P&G has already handed over the marketing and manufacturing licence for an undisclosed fee to Nirma. P&G is not too keen on pumping in the money needed in a competitive market for brands like Camay or Old Spice.