Marico still hungry for acquisitions

After acquiring a slew of brands recently, Marico is in restructuring mode even as it hunts for more buys in its segment.

"Marico would always be looking out for acquisitions. Some proposals are under active consideration," Mr Milind Sarwate, chief for HR and strategy, told Business Line.

He added that most of the recent acquisitions have already started yielding results.

After restructuring, Marico now comprises three strategic business units (SBUs): consumer products business, Kaya business and international business, all of which are profit centres, and three support units - technology, finance and IT and HR and strategy.

This has been carried out as a proactive measure and to accelerate growth.

Mr Sarwate said that certain segments have been modified and the business units have now become more cohesive.

He added that Marico expects growth in sales of its domestic business to be led by flagships Parachute (coconut hair oil) and Saffola (edible oil).

"We believe that growth in one business unit does not come at the cost of growth in another unit. Thus, we can keep firing on all cylinders, be it domestic or international business."

He added that the company's recent acquisition, Nihar (an oil brand), boasted of a turnover of about Rs 120 crore during 2006-07.

The two brands which the company acquired from a company in Egypt, Fiancee and HairCode, have been integrated into its portfolio completely.

The company expects to generate a turnover of about Rs 90 crore during 2007-08 from these two brands.

However, the growth of the recently acquired soap brands, Manjal in India and Aromatic and Camelia in Bangladesh, have been moderate.

"We expect that the soap brands will take some time to perform because we are still new to the soap category," Mr Sarwate said.

During the fourth quarter of 2006-07, the Group recorded net sales (plus services) of Rs 397 crore, posting a 33 per cent rise over the same period last year, 21 per cent of which came organically and 12 per cent inorganically.

Mr Sarwate said with the company raising equity through the qualified institutional placement route, Marico expects the funds situation to be under control, "such that a further equity issue may not be required."

Marico raised funds worth Rs 150 crore through private placement of 29 lakh equity shares at Rs 522 a share in December 2006.

Mr Sarwate also said that the interest costs went up in 2006-07 and may go up further during the current fiscal with the increase in the average level of debt.