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India’s Largest Fragrance Supplier Poised to Go Public

MUMBAI — India’s largest fragrance supplier, SH Kelkar and Co., is ready to take the big step of going public this week, having won approval from the Securities and Exchange Board of India.

Hoping to raise 5 billion rupees, or $77.1 million at current exchange, the company will open its subscription process on Wednesday.

The company’s sales represent approximately 20 percent of the fragrance supply market in India, which is largely dominated by global players, including Givaudan, Firmenich, International Flavors & Fragrances Inc. and Symrise.

As of March 31, 2014, the company had revenues of 7.61 billion rupees, or $117.4 million. In September 2015, the six-month revenue was 4.04 billion rupees, $62 million.

The company exports its fragrance products to 52 countries from its four manufacturing facilities in India and the Netherlands, through PFW Aroma Ingredients B.V., which it acquired in 2011, further strengthening its position in global markets. It also has four manufacturing units — including the one in the Netherlands, with a total installed manufacturing capacity of more than 19,819 tons annually.

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SH Kelkar has been strategically growing its customer base, which includes more than 3,000 companies. “An approximate 57 percent of our revenues from the Indian market, and the rest is global,” Kedar Vaze, director and chief operating officer, SH Kelkar told WWD. “Our manufacturing capacity and research and development has been in place, and growth-ready for both markets,” he said.

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In addition, U.S.-based private equity giant Blackstone bought 33 percent stake in the company in 2010 for 2.4 billion rupees, or $37 million at current exchange. With the initial public offering, Blackstone will sell 10 percent of its stake in the company, to mobilize 2.9 billion rupees, or $44.7 million.

The Indian fragrance and flavor industry includes more than 1,000 companies, ranging from multinational groups, large Indian industrial houses to small-scale units and local manufacturers. Apart from the global players, it is largely dominated by family-owned companies, many of which are now in the third generation and veering towards a stronger technology and professional management. SH Kelkar has also appointed a chief executive officer from outside the family, B Ramakrishnan, in September 2012. Kedar Vaze’s father, Ramesh Vaze, is managing director.

Although SH Kelkar works with fragrances, flavors and aroma chemicals, more than 93 percent of its business is in fragrance. Its customers include major consumer goods companies in India, including Hindustan Unilever Ltd, Godrej Consumer Products Limited, Marico Limited, Wipro Consumer Care and J.K. Helene Curtis, etc., with their fragrance products used  in skin and hair care, fine fragrances,personal care, fabric care, and household products.

The total market size of the Indian fragrance and flavor industry is estimated at 38.05 billion rupees, or $58.9 million, in terms of value and 63.72 thousand tons in terms of volume for 2014.

The fragrance business outranks flavors with a 55 percent share.

The Indian fragrance market has grown at a 10 percent gain in sales over the last four years, according to a market study by Nielsen.

The global fragrance and flavor industry is estimated to be worth $23.90 billion with an almost equal split between the fragrance and flavor markets.