Chennai: UK-based SSL International, currently being paid attention as a takeover target, is leveraging further its Indian joint ventures for its overseas market. The British company has two joint ventures here, both with the TTK group.
The first and long-standing one is the Rs 179.4-crore turnover TTK LIG, Asia's largest condom manufacturer, shipping sheaths to more than 40 countries. The other one is the Rs 15-crore turnover SSL TTK, selling Dr Scholl''s brand foot care products (See ).
The Rs 4-crore equity based SSL TTK is constructing a production facility near Chennai to cater to the domestic and the Asia Pacific markets. The Rs 7.5-crore facility is expected to go on stream next January. Till date, 12 foot care products (cracked heel cream, anti fungal cream, corn removal plasters, callous removal pads) have been launched.
On the condom front, two months ago the British company decided to shift the testing and packing facilities of its Avanti condom - the world''s first non-natural rubber latex/polyurethane condom - to TTK LIG''s Pondicherry unit.
SSL International shut down its testing and packing facilities in the UK on cost considerations. High price is one of the reasons for Avanti not taking off in a major fashion since its launch couple of years ago.
Currently TTK LIG meets SSL International's global latex condom market needs - including the manufacture of premium brand Durex - to a large extent from its plants located in Chennai and Virudhunagar.
Now the company has upgraded its Pondicherry packing unit into a manufacturing facility by commissioning 330-million capacity condom dipping line at an outlay of Rs 20 crore. This will be in addition to the company''s existing capacity of 1.5 billion per year.
"India''s total condom manufacturing capacity is around 2.5 billion. Nearly 20 per cent of the global condom production is situated here," says T T Jagannathan, chairman, TTK group. Further, as the company fabricates its own machines and also exports to SSL International, the capex per million comes down drastically, making the company the cheapest condom manufacturer in the world.
The year 2002-03 turned out to be an excellent year for TTK LIG. The turnover went up by Rs 61 crore to Rs 179.4 crore and the after tax profit spurted by Rs 20.6 crore to Rs 42.1 crore. Exports grew by Rs 32 crore to Rs 111 crore.
Queried about the Rs 29-crore sudden jump in condom sales in the domestic market compared to 2001-02, J Srinivasan, managing director, says: "Non-governmental organisations increased their offtake of subsidised brands."
The market is categorised into five segments: a) The privately-owned branded segment (Kohinoor, Kamasutra, Durex, Moods, Adam) b) Government-subsidised brands (Saajan, Masti, Zaroor) c) Government-owned brands (Nirodh, Nirodh Deluxe) but manufactured by private or public sector units d) For exports - branded as well as international tenders e) Imports.
According to Jagannathan, Kohinoor commands 40 per cent of the 200-million pieces branded condom market. However, the company''s premium brand Durex is yet to make its impression at the market place as it sells just around 3 million pieces. In order to increase Kohinoor''s market share, TTK LIG has developed a new website (www.kohinoorpassion.com) at an outlay of Rs 20 lakh.
SSL International, in the meantime, is getting buyout offers from several suitors. The one being talked about most is from Reckitt Benckiser, UK, the world''s largest household cleaning products company. SSL International has also confirmed that it is in discussions with the interested suitor.
There are mixed reports on Reckitt Benckiser's acquisition plans. Part of the reason for the rethink is also attributed to SSL International''s multiple asset/brand segment mix. The other reason being voiced is that Reckitt Benckiser has been selling its products to housewives and now has to target husbands/single men for the condoms.
SSL International has announced its plans to get rid of its medical division making gloves. Though many Indian groups are now looking out for takeovers overseas, it will be just a romantic thought for the TTK group to bid for its UK joint venture partner as the purchase price will be over Rs 4,000 crore. Incidentally, for the past couple of years the TTK group has been in the process of reinventing itself.