Washington, D.C., Aug. 9, 2010 — The Securities and Exchange Commission today charged the former chief financial officer of a Seattle-area skin care retailer with fraudulently boosting earnings by reporting sales of anti-aging products promoted through Home Shopping Network infomercials while the products still sat unsold in the company’s warehouse. The agency also separately settled charges against the company and began administrative proceedings against the company’s outside auditors for professional misconduct.

The SEC alleges that Karl Redekopp, the former CFO of International Commercial Television Inc. (ICTV), turned millions of dollars of quarterly losses into profits by falsely accounting for ICTV’s sales of the Derma Wand, a skin care appliance that purports to reduce wrinkles and improve skin appearance. Redekopp fraudulently recognized revenue before the Home Shopping Network had actually sold or delivered the product to viewers. He also improperly recognized revenue before a free trial period offered by the company had expired, and failed to reverse revenue from products that had been returned. Redekopp’s misconduct caused the company to falsely report millions of dollars in excess revenue in 2007 and 2008.

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Much research and marketing are being poured into certain segments of the skin care industry. Recently, there has been a resurgence of natural/herbal products. Men who are becoming more aware about grooming are driving the men’s skin care industry,which is rapidly growing as well.

This is the first time Elder Healthcare will roll out its own brands, as till now, the company’s main thrust area has been on marketing and distributing brands of other companies under exclusive licensing arrangement. With this, the company expects to grow its revenue upwards of 60% to achieve a turnover of Rs 300 crore by FY13.

“After growing our distribution network, we are now looking at a balanced portfolio of own and licensed products,” said Elder Healthcare MD Anuuj Saxena.

“We expect around 50% of our revenue will come from own brands in three years. These products will be rolled out in phases from the fourth quarter of this fiscal year,” he said.

At present, Elder Healthcare’s sole own brand AMPM mouthwash contributes a meagre 4% to its turnover. It plans to extend the brand into toothbrush, toothpaste and teeth whitener. In the skincare segment, Elder Healthcare plans to launch 14 SKUs in areas like moisturiser, sun screen, anti-ageing and under-eye gel. The company has given the mandate for these product developments to an Italian firm.

The skin care market in India is estimated to be Rs 4,000 crore, while the oral care segment is worth around Rs 2,500 crore.

At present, Elder’s largest selling FMCG brand is Tiger Balm which alone, has revenue of Rs 30 crore. The product is exclusively licensed to Elder by its owner Haw Par of Singapore. Other key licensed products include Shahnaz Hussain’s Fairone Fairness Cream, VLCC’s Fuel for Men deodorant, Australia-based Rye Pharma’s Burn Aid anti-burn gel, US-based Blistex’s lip care product and US-based Combe’s Just for Men hair colour. These brands enjoy market share ranging between 3% to 20% in their respective segments.

Elder Healthcare also plans to grow its present distribution network of about three lakh outlets by adding another five lakh outlets, primarily in the semi-urban and rural markets.

writankar.mukherjee@timesgroup.com

This acquisition provides Kaya access to an advanced range of skin-care products and a strong sourcing network, including suppliers of products from developed nations, a press release issued here stated.

Marico, however, did not mention the acquisition amount. “With this acquisition, nearly 45 per cent of our skin-care solutions revenue would come from overseas,” Marico’s Chief of Finance, HR & Strategy, Milind Sarwate, said.

The deal envisages the acquisition by Derma Rx International Aesthetics, a wholly-owned subsidiary of Kaya Limited, of the IPRs relating to DermaRx’s business and the shares in wholly-owned subsidiaries of Derma Rx Asia Pacific Pte Ltd.

Derma Rx, operates three centres in Singapore and one in Kuala Lumpur and has a customer-base of about 37,000, generating a turnover of about Rs 50-crore.

Marico plans to introduce, over time, Derma Rx products into its range of offerings at Kaya clinics in India and the Middle-East, the release said.

“This would enable Kaya to increase its share of revenue, from sale of products, from the current level of about 13 per cent to over 20 per cent, the release said.

Derma Rx’s Founders Dr S K Tan and Ms Janifer Yeo, will continue to be engaged in the business for the next three-years, to facilitate the transition and provide Kaya, with the know-how and experience from their expertise in aesthetic solutions in a relatively more-evolved market, the release said.