Project HC

Brand: Hygino®

Transaction Details
May 2020

This document is confidential and private.

Syed Sanakhawan Hussain

Financial Advisor
T: +92 332 2560666
E: sanakhawan@gmail.com
Disclaimer and Notice
Confidential and Private Information

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Company name: Innovative Eximp SMC Private Limited.

Address: 410, Poonawala Trade Tower,
Chaba gali ,off City Court
Karachi Pakistan.
Tel: +92 213 240 1606
Tel: +92 332 O'HYGINO ( 0332 0494 466)
web: www.innovativeeximp.com

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Introduction to Project HC
Covid -19 & beyond: B2B expansion & B2C venture

Overview
• Innovative Eximp (SMC private) limited has been operating as a B2B disinfectant provider 1 Location & Capacity
for more than two years, supplying poly aluminium chloride (water treatment solution) to
Hub Power company since January 2018 under affiliate arrangement with Shaanxi Ande • Gharo - district Thatta, Sindh
Technological Industry Co. Ltd, China. More recently (March 2020) the company has • Facility – 2 acres
initiated hydrogen peroxide and disinfectant supply to various distributors & industrial
consumers including NADRA (450 liters / days) • Company owned land

• Amid the Covid-19 pandemic the sponsors have decided to i) expand B2B offering, • Capacity: 24k tons / annum
foreseeing growing institutional demand & ii) venture into home hygiene / cleaning (B2C) • Employees – 20
segment with “Hygino®” brand in light of a) growing category / product awareness and b)
Source: Company Management
expanding size of the consumer market.
• Hygino® brand was registered in 2018 and is ready for launch in the last week of May
2020. 2 Company Affiliates

• Under the Hygino® brand the company intends to launch four distinct product categories • Specialties:
namely i) toilet bowl cleaner, ii) bathroom cleaner, dish washing liquid & iv) disinfectant http://www.specialities.com.pk/
including hand sanitizer and dairy detergent.
• Innovative Water Technologies
• B2B expansion entails enhancing product portfolio with the inclusion of i) Acid cleaners, ii) & Solution Private Limited
Alkali cleaners, and ii) dairy detergent. All the three products will be supplied in 30 liter https://invwater.com/
drums. Currently hydrogen peroxide is supplier in 20 liter drums while poly aluminium
chloride is supplied in bulk.
• The company has in place a 2 acre state of the art chemical production & processing
3 Prominent customers

facility in Gharo, district Thatta at a distance of 50kms from Karachi. The facility is also
• Engro Polymer
home to a state of the art chemical laboratory which is a hub for product development and
research. • Hub Power Company
• Earlier in the year the company entered into an arrangement to supply 8,000 tons of • NADRA
Barium Chloride to Engro Polymer per annum, resulting in annual saving of USD 1.5mn to • Power China, Port Qasim
national exchequer in addition to significant value creation both from a financial and
strategic perspective for the customer.

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A new normal – Higher consumption post Covid-19
Structural change in demand pattern to trigger a regime change

The transition to a more hygienic future % increased in hygiene budget after the Covid19?
• There is evidence to believe that demand for home hygiene products will 25% 50% 75% 100% 0%
continue to depict double digit growth over the next few years as consumers
and institutions increase budgetary outlay to the segment post Covid-19. 2% 11%
• There is growing consensus amongst existing brands that the surge in
demand is a sustainable phenomenon. Example of dengue fever in Pakistan 35%
and SARS in Japan provide evidence of higher budget allocation to remedies 10%
long after the threat has been contained. Pakistan consumers continue to
spend on insecticide / mosquito repellants while Japanese have become
accustom to using masks.
• Management guidance from major product suppliers e.g. Reckitt Benckiser
suggest they are keen on increasing in-house production capacities vs toll
manufacturing capabilities, indicating that a more robust multi-year trend is 42%
underway. Based on discussion with industry participants, there has been a
1.5x increase in spending post Covid-19 outbreak (supported by our
Monthly cleaning / hygiene budget
consumer survey of 123 respondents, mostly from Karachi). 1%
• On the institutional front, Pakistan market is coming from an extremely low 0 - 1000 1500 - 2000 2000 - 2500 2500 - 3000 3000+
base and we expect disinfectant consumption to become part of Health Safety
and Environment SOPs leading to sustainable demand outlook.
21%
Key insights from the consumer survey
• Consumer survey suggests that 1/3rd of the respondents affirm our hypothesis
of higher spending going forward. We think the statistic understates the actual 46%
demand dynamics since the virus related fear will drive sales.
• More than 50% of the respondents have seen 50%+ increase in budget
allocation to home hygiene products while 35% have observed 25% increase 27%
in spending. We acknowledge that the spike is exaggerated by the fear factor
and will normalize at a higher plateau with higher growth in the category vs.
5%
historical trend.

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Disinfectants: The main play
Segment with the highest growth potential due to i) consumer awareness & ii) B2B market (low base)

Market analysis Hygino® Products

• We expect a regime change in disinfectant demand pattern with sustainably
higher spending in this category.
• Descon Oxychem, largest hydrogen peroxide producer in the country has
Disinfectants: The main play
recently launched Sanidol® with an ex-factory price of PKR 100/liter
(exclusive of tax). Since its first commercial Facebook post on 25th March
Growth withinSandiol®
introducing this subfor segment is expected
general public, toreceived
the post has be the 7k+
strongest
comments
(including company responses) requesting further information.
• Other than Dettol® there is no major brand operating in the space and we see
large opportunity set for new players with high quality standards to make
inroads. Having said that B2C is part of the long term strategy.
• Dettol® Is firmly placed in B2C space both from a strategy and pricing point of
view and we think there an opportunity to take a relatively larger share of the
bulk B2B market.

Key insights from the consumer survey Competing Products

• Based on consumer survey of more than 120 respondents, 90% of the
consumers preferred to use Dettol® as a disinfectant and we expect Dettol®
to remain the single largest brand given its brand equity. We however contend
that the size of the pie will continue to increase, creating room for brands with
quality focused strategy to create space for themselves in a growing market.
Sanidol® is a good example with high demand based on market survey.
• Despite the growing market size, Dettol® is synonymous to antiseptic /
disinfectant, an example of a generic product being recognized as a brand
thus we do not expect to make Hygino® or another brand to make a sizeable
dent to Dettol® market share going forward.
• The most popular SKU is 250ml (~40%) followed by 500ml (20%) and 1 liter
(20%).

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Dish washers – spill over impact of higher category spending
Rising tide lifts all boats

Market analysis
• Dish washing market consists of two major type of products i.e. soap (bar)
and liquid bottle.
• Liquid dish washing market is dominated by Max® (branded by Colgate
Palmolive). SKU size ranges from 250ml to 750ml with 475ml being the most
popular SKU (shown on the right).
• There are a number of other brands namely, Vim®, Hero®, Smart® and NI®.
Both Smart® and NI® are priced under PKR ~150/liter, almost half of the
starting price for Max® and Vim®. Interestingly both Hero® & Vim® are priced
little above Max® in their respective categories, making a case for non-price
competitive strategy against Max®.
• There are three distinct price points in the category (highlighted in yellow in
the graph). We expect demand to remain elevated for an extended period of
time for hygiene oriented products.

PKR / Litre
Key insights from the consumer survey
Max - Ultra
• Based on consumer survey – 40% of respondents used liquid bottles. In terms
Vim Gel Lime
of SKU size, 1/3rd preferred 500ml bottle while preference for 125ml and
250ml is ~25% each. Vim Gel Lemon

• This could be explained by i) lower cost / ml and ii) higher no. of people living Max - Ultra
in a household (50% of the respondents have 6 people while 1/3rd have more Hero
than 6 people / household).
Max - Lemon Fresh
• 60% of the respondents prefer to use Max® while 30% endorsed Vim®. Both Max - Regular
the brands collectively make up more than 90% of the market.
Max - Lemon Fresh
• No. of bottles used was varied greatly from 1 – 13 but the most frequent used
Max - Anti-Bacterial
no. was 5 (mode) and the median was 4 bottles / month.
- 100 200 300 400 500 600 700

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Bathroom & Toilet Bowl cleaners
A case of positive externalities

Market analysis
• Similar to dishwashers, we expect increased consumer awareness towards
holistic cleanliness to increase demand for both bathroom and toilet bowl
cleaner. As per discussion with RB management, Harpic® sales have
increased by at least 1.5x post Covid-19 pandemic and sales are expected to
remain alleviated for the foreseeable future.
• There are a number of brands operating in the domestic market. Pricing
analysis suggests that there is healthy amount of competition as most of the
major brands are priced tightly together between PKR 300 – 400 / liter with an
average price of PKR 356 / liter.
• Brands within the category provide bundled offers yielding discounts to
consumers and increasing basket sales in the process. The same was
acknowledged by RB management.
Key insights from the consumer survey
• Bathroom cleaner segment is dominated by Harpic® which was endorsed by
~60% of the respondents, while only 14% of the respondents use Domex®. In PKR / liter
terms of SKU size, 250ml and 500ml remain the most popular followed by one
Harpic power plus
liter bottle. Mountain
• Similarly, toilet bowl cleaner segment is also dominated by Harpic® which is Atlastis
preferred by 63% of the respondents while Phenyl is endorsed by 22% (which Harpic Orange
Harpic Lime
s a sizeable share of the pie). Unbranded and other brands responses were
Harpic rose
under 5% thus the market is neatly divided between two major players.
Domex Lemon
• In terms of SKU size for toilet bowl cleaner, ~75% of the respondents prefer Domex Pine
500ml and above sized bottles while 23% prefer 250ml bottle size. Domex Blue
Kleen
• No. of bottles used / household is close to 4 and this is in line with more Domex Pink
number of people living / household in Pakistan. Average no .of Adults / Domex Yellow
household in our survey is little under 6 while total people living / household is Hero
8. - 200 400 600 800 1,000

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Management experience and execution capability
The management has proven track record evident by a rich clientele comprising of local and regional corporations

Management Profile
• Mr. Ibrar Hussain Syed has more than 25 years of execution and R&D experience in i) Chemical ii) Food (dairy & supply chain) and iii)
Pharmaceutical sector. He has worked for some of the leading corporations in the country in a number of mission critical roles most notably
as head of Q&A at Nestle beginning in 1987 to head of product development at Engro Foods in mid 2000s. More recently he has been
engaged as an external consultant with a number of leading local companies in dairy & chemical sector.
• He is well know for formulating the entire product range of Engro foods and is credited with introducing liquid tea whitener in Pakistan
through Tarang® .

Project HC
– Hygino®
Key management
personale of the project
has worked for &
consulted to some of
largest brands locally
and globally.

Source: Company Management

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Flow of funds
Funds are required to procure raw material + packaging material (Inventory financing)

Flow of cash from investor to company Flow of payment from customers to investor

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Opportunity
The project is yielding 32.24% IRR (monthly payout) with a 12 month investment horizon

Investment required & expected return

Profit payment details
• The project is seeking PKR 5mn investment for a period of 12-months with an
expected investor IRR of 32.24% assuming monthly profits are reinvested in
short term treasury bills yielding 7%+.
• The profit payout to the investor is secured by the sale of poly aluminium
chloride (PAC) to Hub Power company under affiliate arrangement with
Shaanxi Ande Technological Industry Co. Ltd, China. The transaction
provides PKR 2.8mn revenue and PKR 650,000 profit per month.
• Over the period of 12 months, the PAC supply arrangement to Hub Power
company is expected to yield cash flow of PKR 7.8mn sufficient to payoff PKR
6.56mn (PKR 5mn principal & PKR 1.56mn in profit).
• Furthermore, post dated cheque against initial investment of PKR 5mn & 12
post dated cheque of PKR 130,000 will be provided to the investor.
Profit payout / cash flow to investor
• The investor will have the first right of refusal if the project is scaled beyond
the first phase (which is high probability).
• To secure the interest of the investor, the sponsors have agreed to provide
Honda Vezel (market value at ~4mn) car documents as collateral.
Allocation of funds
• Fund will be allocated in two broad categories
• Raw material (PKR ~3mn)
• Packaging (PKR ~2mn)
• Raw materials mainly include:
• Hydrogen Peroxide
• Isopropyl Alcohol & Glycerin

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Appendix
Product Specifications

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Appendix
Production / Processing capacity at Gharo facility

Production / Processing Facility

• Innovative Eximp’s production / processing facility is situated 50kms from Karachi on National Highway near Café Imran, Gharo. The
location is strategic in nature as it is in close proximity to Port Qasim and the industrial area. The factory land has a covered area of 2 acres
and is owned by the company / sponsors.

Notes
• Barium Chloride production has been delayed due to i) gas leakage incident at Engro Polymer plant earlier this year and then later due to ii)
Covid-19. Supply to Engro Polymer is expected to commence before the mid of May 2020.
• Home Care products and disinfectants are expected to commence operations by the end of May and this is the processing line for which
funding is being sought via this document.
• Calcium carbonate and calcium chloride will be supplied in powder form from July 2020.
• PAC line has been active since 2018 and is supplying to Hub Power Company under affiliate arrangement with a Chinese company.

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Appendix
Product Portfolio & SKUs

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Appendix
Product Portfolio & SKUs

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Appendix
Excerpts from Safety Data Sheet

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Appendix
Copy of the Agreement with Chines affiliate & Trade Mark registration

Trade Mark / Brand details

• Hygino® brand was registered in 2018.
• Some of the goods and services the company can market under
the brand name include (but not limited to): i) household
cleaning, ii) detergents, iii) toiletries iv) soaps etc.

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Appendix
Approved certifications

Quality Management System Environmental Management System

Occupational Health & Safety

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Appendix
Product certifications under progress

FDA certification PSQCA certification

ISO certification

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