The ongoing dispute between Honasa Consumer, the parent company of Mamaearth, and its former distributor, RSM General Trading, has escalated, with a Dubai court reaffirming its earlier order to attach the assets of the D2C brand’s parent company.
In͏͏ an͏͏ exchange͏͏ filing,͏͏ Honasa͏͏ stated͏͏ that͏͏ the͏͏ Court͏͏ of͏͏ Merits͏͏ in͏͏ Dubai͏͏ dismissed͏͏ the͏͏ grievances͏͏ of͏͏ both͏͏ parties͏͏ on͏͏ October͏͏ 1,͏͏ including͏͏ RSM͏͏ General͏͏ Trading’s͏͏ request͏͏ to͏͏ annul͏͏ the͏͏ trading͏͏ licence͏͏ of͏͏ Honasa͏͏ Consumer͏͏ General͏͏ Trading͏͏ LLC,͏͏ its͏͏ subsidiary͏͏ in͏͏ Dubai.
The͏͏ Dubai͏͏ court’s͏͏ initial͏͏ ruling͏͏ was͏͏ issued͏͏ on͏͏ June͏͏ 6,͏͏ prompting͏͏ both͏͏ parties͏͏ to͏͏ file͏͏ appeals͏͏ against͏͏ the͏͏ decision.
In͏͏ an͏͏ exchange͏͏ filing,͏͏ Honasa͏͏ stated,͏͏ “The͏͏ Company͏͏ has͏͏ received͏͏ the͏͏ judgment͏͏ dated͏͏ October͏͏ 1,͏͏ 2024,͏͏ from͏͏ the͏͏ Court͏͏ of͏͏ Merits͏͏ in͏͏ Dubai,͏͏ which͏͏ rejected͏͏ the͏͏ grievances͏͏ submitted͏͏ by͏͏ both͏͏ parties.͏͏ The͏͏ court͏͏ has͏͏ ordered͏͏ the͏͏ attachment͏͏ of͏͏ assets͏͏ belonging͏͏ to͏͏ Honasa͏͏ Consumer͏͏ Limited͏͏ in͏͏ the͏͏ UAE͏͏ and͏͏ declined͏͏ to͏͏ revoke͏͏ the͏͏ trading͏͏ licence͏͏ of͏͏ Honasa͏͏ Consumer͏͏ General͏͏ Trading͏͏ LLC.”
Honasa Plans͏͏ to͏͏ Appeal͏͏ Latest͏͏ Judgment:
However,͏͏ the͏͏ D2C͏͏ major͏͏ stated͏͏ in͏͏ the͏͏ filing͏͏ that͏͏ it͏͏ intends͏͏ to͏͏ appeal͏͏ the͏͏ Dubai͏͏ court’s͏͏ most͏͏ recent͏͏ ruling.
Continue͏͏ Exploring:͏͏ Delhi͏͏ HC͏͏ orders͏͏ Honasa Consumer’s͏͏ UAE͏͏ distributor͏͏ to͏͏ withdraw͏͏ execution͏͏ proceedings͏͏ in͏͏ Dubai
Market͏͏ Reaction:
As͏͏ a͏͏ result,͏͏ Honasa’s͏͏ shares͏͏ plummeted͏͏ by͏͏ as͏͏ much͏͏ as͏͏ 4.6%,͏͏ hitting͏͏ an͏͏ intraday͏͏ low͏͏ of͏͏ INR͏͏ 425.00.
However,͏͏ emphasizing͏͏ a͏͏ directive͏͏ from͏͏ the͏͏ Delhi͏͏ High͏͏ Court,͏͏ Honasa͏͏ asserted͏͏ that͏͏ the͏͏ latest͏͏ ruling͏͏ will͏͏ not͏͏ have͏͏ any͏͏ financial͏͏ implications͏͏ for͏͏ the͏͏ company.
The͏͏ order͏͏ noted͏͏ that͏͏ if͏͏ the͏͏ Dubai͏͏ court͏͏ proceeds͏͏ with͏͏ enforcement͏͏ against͏͏ Honasa,͏͏ the͏͏ Delhi͏͏ High͏͏ Court͏͏ will͏͏ release͏͏ the͏͏ funds͏͏ to͏͏ the͏͏ D2C͏͏ brand.
In͏͏ its͏͏ latest͏͏ filing,͏͏ Honasa͏͏ highlighted͏͏ that͏͏ it͏͏ is͏͏ in͏͏ the͏͏ process͏͏ of͏͏ initiating͏͏ contempt͏͏ proceedings͏͏ against͏͏ RSM͏͏ General͏͏ Trading͏͏ in͏͏ the͏͏ Delhi͏͏ High͏͏ Court͏͏ for͏͏ not͏͏ adhering͏͏ to͏͏ the͏͏ court’s͏͏ ruling.
At͏͏ the͏͏ centre͏͏ of͏͏ this͏͏ controversy͏͏ is͏͏ Honasa’s͏͏ decision͏͏ to͏͏ sever͏͏ ties͏͏ with͏͏ RSM͏͏ General͏͏ Trading,͏͏ which͏͏ claims͏͏ that͏͏ Honasa͏͏ abruptly͏͏ terminated͏͏ their͏͏ distributorship͏͏ agreement.
RSM͏͏ General͏͏ Trading͏͏ served͏͏ as͏͏ Honasa’s͏͏ distributor͏͏ in͏͏ the͏͏ Middle͏͏ East͏͏ and͏͏ Africa͏͏ from͏͏ July͏͏ 30,͏͏ 2020,͏͏ to͏͏ January͏͏ 17,͏͏ 2023.
Earlier͏͏ in͏͏ May,͏͏ the͏͏ UAE’s͏͏ Court͏͏ of͏͏ Full͏͏ Commercial͏͏ Jurisdiction͏͏ ordered͏͏ Honasa͏͏ to͏͏ pay͏͏ AED͏͏ 25.07͏͏ million͏͏ (around͏͏ INR͏͏ 57͏͏ crore)͏͏ in͏͏ damages͏͏ to͏͏ RSM͏͏ General͏͏ Trading.
In͏͏ addition,͏͏ the͏͏ court͏͏ directed͏͏ the͏͏ company͏͏ to͏͏ pay͏͏ legal͏͏ interest͏͏ at͏͏ a͏͏ rate͏͏ of͏͏ 5%͏͏ (from͏͏ the͏͏ date͏͏ the͏͏ judgment͏͏ becomes͏͏ final͏͏ until͏͏ full͏͏ payment͏͏ is͏͏ made)͏͏ and͏͏ AED͏͏ 1,000͏͏ (INR͏͏ 22,665)͏͏ for͏͏ attorney͏͏ fees.
Founded͏͏ in͏͏ 2016͏͏ by͏͏ husband-and-wife͏͏ duo͏͏ Varun͏͏ and͏͏ Ghazal͏͏ Alagh,͏͏ Honasa’s͏͏ product͏͏ portfolio͏͏ includes͏͏ six͏͏ beauty͏͏ and͏͏ personal͏͏ care͏͏ brands:͏͏ Mamaearth,͏͏ The͏͏ Derma͏͏ Co.,͏͏ Aqualogica,͏͏ Ayuga,͏͏ BBlunt,͏͏ and͏͏ Dr.͏͏ Sheth’s.
Financially,͏͏ the͏͏ D2C͏͏ major͏͏ reported͏͏ a͏͏ 62.9%͏͏ increase͏͏ in͏͏ its͏͏ profit͏͏ after͏͏ tax͏͏ (PAT),͏͏ rising͏͏ to͏͏ INR͏͏ 40.2͏͏ crore͏͏ in͏͏ the͏͏ June͏͏ quarter͏͏ (Q1)͏͏ of͏͏ the͏͏ financial͏͏ year͏͏ 2024-25͏͏ (FY25),͏͏ up͏͏ from͏͏ INR͏͏ 24.7͏͏ crore͏͏ in͏͏ the͏͏ same͏͏ quarter͏͏ last͏͏ year,͏͏ driven͏͏ by͏͏ higher͏͏ sales͏͏ of͏͏ its͏͏ beauty͏͏ products.
Operating͏͏ revenue͏͏ increased͏͏ by͏͏ 19.3%͏͏ year-on-year͏͏ (YoY)͏͏ and͏͏ 17.3%͏͏ sequentially,͏͏ reaching͏͏ INR͏͏ 554͏͏ crore͏͏ in͏͏ the͏͏ reported͏͏ quarter.
Shares͏͏ of͏͏ Honasa͏͏ closed͏͏ Friday’s͏͏ trading͏͏ session͏͏ at͏͏ INR͏͏ 427.95͏͏ on͏͏ the͏͏ BSE,͏͏ marking͏͏ a͏͏ decline͏͏ of͏͏ 4.04%͏͏ from͏͏ the͏͏ previous͏͏ close.
