Marico scouts for buys in domestic market

As part of its inorganic growth strategy, FMCG major Marico Ltd is aggressively scouting for acquisitions in domestic markets. The company is planning to acquire two regional brands in the beauty & wellness sector in India. Currently, the company is in talks with two players based in southern states in this space, informed industry sources. Incidentally, Marico has decided to divest its entire stake in its wholly owned subsidiary Sundari LLC which is engaged in the manufacturing and marketing of skincare cosmetics in the USA. According to industry analysts, Marico will be investing in domestic acquisitions after completing its formalities to divest stake in Sundari LLS. “Since the acquisition of ‘Manjal’ (herbal soap) in Kerala in 2006, Marico has been scouting for southern skin care brands for a while”, said an analyst based in Mumbai. In 2006, Marico had bought out Hindustan Lever Ltd's Nihar brand for a Rs 227 crore. In the same year, the company also acquired Fiancee (a hair care brand) from Egypt-based Ready Group.
When contacted, Chaitanya Deshpande, head of Mergers & Acquisitions (M&A), Marico declined to comment on Marico’s specific acquisition plans. “The company has identified inorganic growth as part of its corporate strategy and is open to considering acquisition opportunities. We can not comment on any specific opportunities,” he said. On the rationale behind Marico’s decision to divest in Sundari LLC, Deshpande said that a majority of Sundari’s revenue is generated from B2B sales to spas located within luxury resorts and hotels globally. “Sundari constituted only a small share of Marico’s revenue. Moreover, the US which is Sundari’s base, has not been a part of Marico’s focus geographies for growth, which has come increasingly from Asia and Africa. The divestment is thus a logical part of Marico’s global strategy,” he added. The Group posted a net profit of Rs 188.7 crore for the year ended March 31, 2009, 11.6 % higher than the Rs 169 crore net profit for the year ended March 31, 2008. The group’s total income rose by 25 % to Rs 2402.6 crore for the year, compared to Rs1914.5 crore for the previous year. Enthused by its performance in FY 09, Marico is planning an increase in its advertising and marketing spend in 2009-10

Source: Financial Express