Godrej scouting for acquisitions

Written by Lalitha Srinivasan | Mumbai | Updated: Feb 5 2014, 11:26am hrs
After acquiring personal care brand Soft & Gentle from Colgate-Palmolive in the UK last year, Godrej Consumer Products (GCPL) is aggressively scouting for acquisitions in both domestic and overseas markets. The company is primarily looking for acquisitions in Africa and Indonesia to buy out personal and home care brands, said Vivek Gambhir, managing director.

The R7,800 crore GCPL is planning to increase its equity stake beyond 51% in African hair care firm Darling Group Holdings, which it acquired in June 2011. "We are planning to increase our stake in one or two geographies in Africa where we are currently operating with the Darling Group. These include our joint operations in Kenya, Mozambique and Nigeria, said Gambhir.

The company also plans to enter new geographies with its venture partner Darling Group in other countries in Africa.

In June 2011, GCPL had acquired 51% stake in the Darling Group for over R500 crore. At present, Darling Group Holdings operates in 14 countries across sub-Saharan Africa.

Prior to this, GCPL had clinched four acquisitions in 2010: Argencos in Latin America, Megasari in Indonesia, Issue Group in Latin America and Tura of Nigeria.

As part of its organic growth strategy, GCPL is ramping up its manufacturing operations by setting up new plants and expanding in existing manufacturing capacities this year. ''In January 2014, we have set up a new plant in Guwahati to produce hair colour and home care products, said Gambhir.

To reach out to a wider target audience, GCPL is extending its distribution network by 15% in both rural and urban India. At present, it has access to 50,000 villages across the country.

In Q3 FY2014, GCPL's rural business grew by 22% with its increased rural penetration, said Gambhir. In the third quarter, our rural growth was higher than our urban business. In fact, our rural sales are increasing in the last few quarters, he added.

In January this year, the company raised prices of its soap brands by 3-4% to counter the rising inputs costs.

To tide over the economic slowdown, GCPL has launched cost-cutting measures which include project 'Icon'. "Our target is to save R100 crore this year with the help of this project. There's no freeze in our recruitment. In fact, we are open to hiring competent professionals, said Gambhir.

Commenting on GCPL's performance in Q3 FY2014, Abneesh Roy, associate director (research) at Edelweiss Capital, said: "GCPL's revenue in Q3 came in line with our estimates. Key positives include robust sales growth of 37% y-o-y in its hair care business."