Mamaearth Parent Company Combining Two Subsidiaries to Eliminate Cost Overlaps

Honasa Consumer, a Delhi-NCR based company and the parent company of the D2C brand Mamaearth, has announced that its board has approved the merger of two of its wholly owned subsidiaries – Just4Kids Services Private Limited and Fusion Cosmecutics Private Limited – with the company itself.

According to an exchange filing, Honasa stated that the merger scheme is contingent upon obtaining regulatory approvals, including those from the New Delhi and Chandigarh benches of the National Company Law Tribunal.

Honasa stated that the merger will reduce redundant costs and enhance financial efficiencies. The combined operations are anticipated to be significantly cost-effective, leading to an increase in overall shareholder value and strengthening the competitive position of the newly formed entity.

Additionally, the merger will streamline management layers, increase management focus, and improve cash management efficiency.

Related: Honasa, Mamaearth’s Parent, Expands into Color Cosmetics with ‘Staze’

Fusion Fusion Cosmeceutics, the main company behind Dr. Seth’s, focuses mainly on creating and selling skincare items. Mamaearth took over a significant portion of Fusion Fusion Cosmeceutics in May 2022 for INR 28 Cr. By the end of the first nine months in 2024, Fusion Fusion Cosmeceutics had earned INR 76.6 Cr in revenue.

On another note, Just4Kids stands as the parent company of Momspresso, extending invaluable guidance on parenting and pregnancy to moms in various languages, including English, Hindi, and eight other regional dialects.

It’s worth mentioning that Momspresso marked Mamaearth’s initial venture into acquisition territory, valued at INR 167.9 Cr. As the IPO loomed, access to Momspresso’s website vanished, remaining elusive to this day.

Last July, Mamaearth made the decision to close down two sectors of Momspresso – Momspresso MyMoney and its brand marketing branch. Prior to this, the startup bid farewell to 80-100 team members in early 2023.

According to the red herring prospectus (RHP) of Mamaearth, a decision was made by the startup’s board during a meeting in March 2023 to “scale down” most of Momspresso’s business segments. Additionally, Honasa incurred a goodwill impairment loss amounting to INR 136 Cr in FY23, resulting in a net loss of INR 151 Cr for the year. Mamaearth also wrote off INR 136 Cr of goodwill for Just4Kids. In total, the company reported exceptional items before tax of INR 155 Cr in FY23, primarily due to the impairment of goodwill and other intangible assets. Without these factors, the startup would have recorded a net profit of approximately INR 3.7 Cr for the year in review. Just4Kids achieved a revenue of INR 4 Cr in the first nine months of FY24. Honasa’s shares closed Friday’s session 0.9% higher at INR 385.75 on the BSE.

Honasa Consumer, the parent company of Mamaearth, has approved the merger of two subsidiaries, expecting to reduce costs and enhance financial efficiencies. Fusion Fusion Cosmeceutics, which specializes in skincare products, was acquired by Mamaearth and earned INR 76.6 Cr in revenue by the end of the first nine months of 2024. Just4Kids, the parent company of Momspresso, underwent restructuring and impairment losses in FY23, recording INR 4 Cr in revenue for the first nine months of FY24. This strategic business reorganization aims to streamline operations and bolster the competitive edge of the newly formed entity.Top of Form