Honasa Consumer, the Delhi-NCR based parent entity of D2C brand Mamaearth, has announced that its board has approved the integration of two of its wholly owned subsidiaries – Just4Kids Services Private Limited and Fusion Cosmecutics Private Limited – into itself.
In a filing with the exchange, Honasa mentioned that the proposed merger scheme would be contingent upon obtaining several regulatory approvals, including those from the National Company Law Tribunal benches in New Delhi and Chandigarh.
Honasa stated that the amalgamation aims to eliminate cost duplication and enhance financial efficiencies. “The anticipated streamlined operations are poised to significantly improve cost-effectiveness, thereby maximizing shareholder value and bolstering the competitive standing of the merged entity,” the company remarked.
Moreover, the amalgamation will eliminate redundant hierarchical layers, enhance managerial focus, and contribute to improved efficiency in cash management, the company added.
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Fusion Cosmecutics, the parent company of Dr. Seth’s, focuses primarily on formulating and trading skincare products. Mamaearth acquired a controlling interest in Fusion Cosmecutics in May 2022, valuing the company at INR 28 Cr. During the initial nine months of 2024, Fusion Cosmecutics recorded a revenue of INR 76.6 Cr.
Conversely, Just4Kids serves as the parent company of Momspresso, providing mothers with parenting tips and pregnancy guidance in multiple languages, such as English, Hindi, and eight additional regional languages.
It’s worth mentioning that Momspresso marked Mamaearth’s initial acquisition at INR 167.9 Cr. Prior to its IPO, Momspresso’s website was taken offline and remains inaccessible to this day.
In July last year, it was reported that Mamaearth was discontinuing two verticals of Momspresso – Momspresso MyMoney and its brand marketing division. Prior to closing these segments, the startup had laid off 80-100 employees earlier in 2023.
According to Mamaearth’s red herring prospectus (RHP), the startup’s board, during a meeting in March 2023, resolved to “scale down” a significant portion of Momspresso’s business verticals.
Additionally, Honasa incurred a goodwill impairment loss of INR 136 Cr in FY23, leading to a net loss of INR 151 Cr for the year. Mamaearth also wrote off goodwill amounting to INR 136 Cr for Just4Kids.
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Overall, the company reported exceptional items before tax of INR 155 Cr in FY23, largely due to the impairment of goodwill and other intangible assets. Excluding these, the startup would have reported a net profit of about INR 3.7 Cr during the year under review.
In the initial nine months of FY24, Just4Kids recorded a revenue of INR 4 Cr.
On the BSE, Honasa’s shares concluded Friday’s session up by 0.9% at INR 385.75.