Personal care major Marico has decided to put brakes on the expansion plans of Kaya Skin clinics in India due to drop in discretionary spends and a hike in price following 10 per cent service tax on services. However, it will continue to add more branches in its Middle East portfolio where profit margins are higher due to ready market and non-tax benefits. Currently, international business contributes 25 per cent to Kaya’s revenues.
The new strategy will focus on making existing branches more profitable through various promotional activities and offering. Kaya is also counting on its over-the-counter (OTC) sale of personal care products which includes daily care, skin and hair solutions and beauty products for men. Currently, this category accounts for 13 per cent in Kaya’s Rs 200-crore turnover.
Kaya skin care’s turnover grew by 10 per cent during the quarter ended Dec’09. However, a cut in consumer spends and price hikes by Kaya company affected growth.