Investors critical of Jyothy Laboratories' lack of focus on growth business, stocks fall 0.5%

Less than a month after praising Jyothy Laboratories' move to acquire Henkel India, investors and analysts have criticised the company for focusing less on its existing businesses. The company's fourth quarter and 2010-11 results show growth in some of its main brands has dropped, analysts said.

This is because of the company's increased focus on expanding through acquisitions, they said. A fund manager of broking house's portfolio management services arm, which holds Jyothy's shares, said the benefits of Henkel's acquisition, which was announced recently, could be seen only in the long run because of its operating losses and high debt. Till then, the company will have to continue focusing on reviving its existing brands.

The company's move to acquire Henkel will pave the entry into the country's urban detergent market. Currently, over 70% of Jyothy's revenues come from rural India. Jyothy's shares, which have moved in a thin band in recent weeks, fell 0.5% to close at 206.45 on Monday.